Mr. and Mrs. Dean own an investment that generated $60,000 cash revenue and required $12,000 cash expenses
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Question:
Mr. and Mrs. Dean own an investment that generated $60,000 cash revenue and required $12,000 cash expenses this year. The Deans’ marginal tax rate is 25%. Which of the following statements is true?
A). If only $52,000 of the revenue is taxable, but all the expenses are deductible, the Deans’ after-tax cash flow is $40,000.
B). If the revenue is taxable, but only $8,500 of the expenses are deductible, the Deans’ after-tax cash flow is $38,625.
C). The Deans’ before-tax cash flow is $48,000.
D). Statements B. and C. are true.
Related Book For
Fundamentals of Investments Valuation and Management
ISBN: 978-0077283292
5th edition
Authors: Bradford D. Jordan, Thomas W. Miller
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