The before-tax MARR is a) is approximately equal to the after-tax MARR. b) lower

ID: 2402830 • Letter: T

Question

The before-tax MARR is

a) is approximately equal to the after-tax MARR.

b) lower than the after-tax MARR by "1/(1-t)", where t is the corporate tax rate.

c) lower than the after-tax MARR by "1-t", where t is the corporate tax rate.

d) higher than the after-tax MARR by "1/(1-t)", where t is the corporate tax rate.

a) is approximately equal to the after-tax MARR.

b) lower than the after-tax MARR by "1/(1-t)", where t is the corporate tax rate.

c) lower than the after-tax MARR by "1-t", where t is the corporate tax rate.

d) higher than the after-tax MARR by "1/(1-t)", where t is the corporate tax rate.

Before tax MARR = Taxes plus after tax MARR

For example if BEFORE tax MARR is 20% and tax rate is 25% , after tax MARR = 20% * (1-25%)= 15%

Before tax MARR is higher than after tax MARR by 5% that is 1/(1-25%)=1.333 times

By multiplying 1.3333 with after tax MARR , before tax MARR is arrived

Thus, correct option is option -D

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