Charles Is a Single Person, Age 35, with No Dependents

question 412

Multiple Choice

Charles is a single person, age 35, with no dependents. In 2018, Charles has gross income of $75,000 from his sole proprietorship. Charles also incurs $80,000 of deductible business expenses in connection with his proprietorship. He has interest and dividend income of $22,000. Charles has $7,000 of itemized deductions. Charles's taxable income is

• A) $10,000.
• B) $5,000.
• C) $17,000.
• D) None of the above.

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Definitions:

Discount Factor

A multiplier used to determine the present value of future cash flows, reflecting the time value of money.

Rate Of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's cost.

Profitability Index

A calculation used to assess the relative profitability of an investment, computed as the present value of future cash flows divided by the initial investment cost.

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specific interest rate.