Recall Application 3, "Is a VAT in Our Future?" to Answer

question 18

Multiple Choice

Recall Application 3, "Is a VAT in our Future?" to answer the following questions.
-According to the application, what is the difference between a VAT and a sales tax?

• A) The sales tax is a consumption tax while the VAT is not.
• B) The VAT is already embedded in the price of the good, while sales taxes are paid upon purchase.
• C) The sales tax is easy to collect while the VAT is not.
• D) The sales tax is regressive while the VAT is not.

---

Definitions:

EBIT

Earnings Before Interest and Taxes, a measure of a company's profitability that excludes interest and income tax expenses.

Unlevered Cost

The cost of capital for a company without any debt in its capital structure.

Par Bonds

Bonds that are issued and traded at their face value or nominal value.

Financial Leverage

Utilizing borrowed money to amplify the possible gains from an investment, while also elevating the chance of incurring losses.