Loan Repayment and Savings Plans

Particulars Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Value
Preference market return	11.00%
Bond market return Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	7.00%
Share market return	20.00%
Market return for Kai	(J16+J17+J15)/3
Market return for Kai	12.67%

There is significant difference between classical taxation system and imputation taxation system, which are used by the regulator to extract relevant taxes from companies and individuals. With the help of classical taxation system, the regulators for conducting double taxation on the investors that received dividend from organizations. However, the imputation taxation system helped in minimizing the chance of double taxation that was being conducted by regulators. The classical taxation system is still being implemented by majority of the countries around the world, while some of the countries such as Australia and New Zealand in using imputation taxation system to infuse growth in its financial market by luring both international and domestic investors (Faccio & Xu, 2015).

• Difference tax method:Both the classical taxation system and imputation taxation system has a different tax method which is imposed on companies and investors. Under the classical taxation system, the organization needs to pay the taxes before delivering the dividend and after receiving the dividend investors need to pay taxes according to their marginal tax rate. However, under the imputation taxation system the organization need to pay the taxes before delivering the dividend, after which the investors can use the tax credits to reduce the level of cash outflow and increase the dividend payments.
• Reduction in double taxation:The classical taxation system relatively motivated the authorities to conduct double taxation and reduce the level of dividend income of the investors. However, under the imputation taxation system the investors are able to deduct the tax credits and reduce the level of Tax amount of the investors. Therefore, double taxation measure is the major difference between the classical taxation system and imputation taxation system.
• Increment in investor’s investment:Under the classical taxation, system investors are relatively charged more for the dividend as they are double taxed on their investment returns. This mainly demotivates the investors in conducting adequate investments in a particular market that increases the level of cost of investment. On the other hand, imputation taxation system relatively reduces the excessive cost that is incurred by investors in conducting investments which relatively increases the investor’s investment in a particular financial market. Both International and Domestic investors want imputation taxation system, as it minimizes the level of cash outflow from investments (Nguyen, 2016).

The calculations conductance in the above table relatively depicts the overall dividend after taxes that are collected by individuals with different marginal tax rate under the classical taxation system. From the evaluation, it could be understood that the investors with marginal tax rate of 40% would provide net dividend of $2.310 for a dividend of $3.850. The calculations directly indicate that under classical taxation system the shareholders are taxed double, which reduces the level of dividend payments of the investors., which can eventually help in generating high level of cash inflow for the investors.

The above table directly indicates the implication taxation system that can be used by investors to detect the level of income generated from a particular dividend. The dividend imputation system does not rely on double taxation, where it allows the investors to use franking credits for reducing the level of taxes that is incurred from an investment. The calculations directly indicate that given after taxes of the investor is relatively higher in terms of imputation taxation system as compared to classical taxation system (Abraham, Dempsey & Marsden, 2015).

 The calculations indicate that with the implementation of computation taxation system will eventually allow the investors to reduce the cash outflow in terms of taxes. The above example directly indicate that the imputation taxation system will allow the investors to accumulate the dividend after taxes at the levels of $3.300 for a marginal tax rate of 40%.On the other hand the same dividend for a marginal tax rate of 40% under classical taxation system will provide the investors with only $2.310. The difference directly indicates the positive attributes of the imputation taxation system

The imputation taxation system has relevant impact on both the domestic and international investors, as it increases the level of Income for the investors. Imputation system has a relevant impact on the decision-making capability of the investors as it allows them to generate high level of income ignorance of double taxation method. Countries such as New Zealand and Australia are relatively using imputation taxation system to lure in more investors and increase investment from both domestic and international investors.

Decision making capability of the investors are relatively impact by the imputation taxation system, as investors tend to reduce the level of cost incurred from investment by ignoring the  countries using classical taxation system. This measure relatively helps the investors to increase the level of income from investment while reducing the tax cash outflow. This measure but relatively increase the level of investment from both International and domestic investors, as we can earn higher returns from investment. Furthermore, alterations in dividend policy of the company would also have impact on the investors decision-making capabilities, as investors will raise the level of investment in an organization, due to the low level of cost incurred from investment (Nguyen, 2016).

CBA.AX
Date	Close	Monthly Holding Period Return
6/1/2017	82.81
7/1/2017	83.73	1.111%
8/1/2017	75.80	-9.471%
9/1/2017	75.25	-0.726%
10/1/2017	77.63	3.163%
11/1/2017	79.43	2.319%
12/1/2017	80.34	1.146%
1/1/2018	78.87	-1.830%
2/1/2018	76.39	-3.144%
3/1/2018	72.31	-5.341%
4/1/2018	71.82	-0.678%
5/1/2018	69.30	-3.509%
6/1/2018	72.87	5.152%

WBC.AX
Date	Close	Monthly Holding Period Return
6/1/2017	30.51
7/1/2017	31.82	4.294%
8/1/2017	31.27	-1.728%
9/1/2017	31.92	2.079%
10/1/2017	32.99	3.352%
11/1/2017	31.47	-4.607%
12/1/2017	31.35	-0.381%
1/1/2018	30.96	-1.244%
2/1/2018	30.77	-0.614%
3/1/2018	28.62	-6.987%
4/1/2018	28.64	0.070%
5/1/2018	27.85	-2.758%
6/1/2018	29.30	5.206%

AORD
Date	Close	Monthly Holding Period Return
6/1/2017	5,764.00
7/1/2017	5,773.90	0.172%
8/1/2017	5,776.30	0.042%
9/1/2017	5,744.90	-0.544%
10/1/2017	5,976.40	4.030%
11/1/2017	6,057.20	1.352%
12/1/2017	6,167.30	1.818%
1/1/2018	6,146.50	-0.337%
2/1/2018	6,117.30	-0.475%
3/1/2018	5,868.90	-4.061%
4/1/2018	6,071.60	3.454%
5/1/2018	6,123.50	0.855%
6/1/2018	6,289.70	2.714%

Particulars	CBA.AX	WBC.AX	AORD
Average Holding period return	-0.984%	-0.277%	0.752%

Particulars	CBA.AX	WBC.AX	AORD
Annual Holding period return	-0.984%*12	-0.277%*12	0.752%*12
Annual Holding period return	-11.808%	-3.320%	9.019%

Particulars	CBA.AX	WBC.AX	AORD
Standard deviation	4.018%	3.604%	2.169%

Particulars	CBA.AX	WBC.AX
Risk free rate (10-year government bond)	2.7800%	2.7800%
Beta (Risk)	1.2300	1.2600
Market Return (ASX return)	5.8500%	5.8500%
Expected return	2.7800%+1.2300 * (5.8500%-2.7800%)	2.7800%+1.2600 * (5.8500%-2.7800%)
CAPM(Return)	6.5561%	6.6482%

Particulars	CBA.AX	WBC.AX
Weight	60.0%	40.0%
CAPM(Return)	6.5561%	6.6482%
Beta (Risk)	1.2300	1.2600
Beta (Portfolio)	(60.0% * 1.2300) + (40.0%*1.2600)
Beta (Portfolio)	1.2420
Return (Portfolio)	(60.0% * 6.5561%) + (40.0%*6.6482%)
Return (Portfolio)	6.5929%

The calculations conducted in the above tables directly represent the overall return and risk, which is presented by CBA, WBC and portfolio. The risk and return attributes of all the three investment option are similar, which indicates that investment in either of the option would generate return for the investors. The investment option indicates the rising risk will ensure higher returns from investors (Gottschlich & Hinz, 2014).

Reference

Abraham, M., Dempsey, M., & Marsden, A. (2015). Dividend reinvestment plans: a tax-based incentive under the Australian imputation tax system. Austl. Tax F., 30, 435.

Au.finance.yahoo.com. (2018). Au.finance.yahoo.com. Retrieved 18 December 2018, from https://au.finance.yahoo.com/quote/CBA.AX/history?period1=1464719400&period2=1498761000&interval=1mo&filter=history&frequency=1mo

Au.finance.yahoo.com. (2018). Au.finance.yahoo.com. Retrieved 18 December 2018, from https://au.finance.yahoo.com/quote/WBC.AX/history?period1=1464719400&period2=1498761000&interval=1mo&filter=history&frequency=1mo

Faccio, M., & Xu, J. (2015). Taxes and capital structure. Journal of Financial and Quantitative Analysis, 50(3), 277-300.

Gottschlich, J., & Hinz, O. (2014). A decision support system for stock investment recommendations using collective wisdom. Decision support systems, 59, 52-62.

Nguyen, H. K. (2016). A question of the integrity of the dividend imputation system when corporate tax rate changes: An Australian study. J. Austl. Tax’n, 18, 43.