Roger Is Considering Making a $6,000 Investment in a Venture

question 22

Multiple Choice

Roger is considering making a $6,000 investment in a venture that its promoter promises will generate immediate tax benefits for him.Roger, who does not anticipate itemizing his deductions, is in the 30% marginal income tax bracket.If the investment is of a type that produces a tax credit of 40% of the amount of the expenditure, by how much will Roger's tax liability decline because of the investment?

• A)$0
• B)$1,800
• C)$2,200
• D)$2,400
• E)None of these.

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Definitions:

BAT Model

The Behavior, Attitude, Technique (BAT) Model is a framework used for improving sales effectiveness and training by focusing on the behavior, attitude, and techniques of sales personnel.

Fixed Cost

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance premiums.

Opportunity Rate

The return a company foregoes by investing capital in one project over a potentially more profitable alternative.

Lockbox System

A service provided by banks to companies for the receipt of payment from customers, involving the direct sending of payments to a location accessible by the bank, which then deposits the funds into the company's account.