Ms. Kent has $200,000 in an investment paying 8% annual interest. Her marginal tax rate is 40%.

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Ms. Kent has $200,000 in an investment paying 8% annual interest. Her marginal tax rate is 40%. Which of the following statements is false?

A. Ms. Kent's annual before-tax cash flow from this investment is $16,000.

B. If the interest is tax-exempt, Ms. Kent's annual after-tax cash flow is $16,000.

C. If the interest is taxable, Ms. Kent's annual after-tax cash flow is $6,400.

D. None of the above is false.

Related Book For answer-question

Accounting concepts and applications

ISBN: 978-0538745482

11th Edition

Authors: Albrecht Stice, Stice Swain

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Posted Date: Feb 02, 2022 01:34 AM

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Ms. Kent has $200,000 in an investment paying 8% annual interest. Her marginal tax rate is 40%.

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Expert Answer:

CExplanation Computation of beforetax cash flow Investment x Annu... View the full answer

Accounting concepts and applications

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