New Business Is Just Being Formed by 10 Investors,each of Whom

question 13

Multiple Choice

New Business is just being formed by 10 investors,each of whom will own 10% of the business.The firm is expected to earn $1,000,000 before taxes each year.The corporate tax rate is 34% and the personal tax rate for the firm's investors is 35%.The firm does not need to retain any earnings,so all of its after-tax income will be paid out as dividends to its investors.The investors will have to pay personal taxes on whatever they receive.How much additional spendable income will each investor have if the business is organized as a partnership rather than as a corporation?

• A)$20,384
• B)$20,800
• C)$21,225
• D)$21,658
• E)$22,100

---

Definitions:

Halo Effect

A mental shortcut where the general perception of an individual, corporation, brand, or product shapes the observer's emotions and opinions regarding that entity's attributes or qualities.

Attractive Faces

Facial features or characteristics that are considered aesthetically pleasing or beautiful according to social or cultural standards.

Unattractive Faces

Refers to facial appearances that are generally perceived as not aesthetically pleasing or less attractive according to societal standards.

Emotional Maturity

The ability to manage and understand one's own emotions and respond to others' emotions appropriately.