Which of the Following Statements Is CORRECT

question 22

Multiple Choice

Which of the following statements is CORRECT?

• A) Since companies can deduct dividends paid but not interest paid,our tax system favors the use of equity financing over debt financing,and this causes companies' debt ratios to be lower than they would be if interest and dividends were both deductible.
• B) Interest paid to an individual is counted as income for federal tax purposes and taxed at the individual's regular tax rate,which in 2018 could go up to 39.6%,but qualified dividends received are taxed at a maximum rate of 15% for most individuals.
• C) The maximum federal tax rate on corporate income in 2018 was 50%.
• D) Corporations obtain capital for use in their operations by borrowing and by raising equity capital,either by selling new common stock or by retaining earnings.The cost of debt capital is the interest paid on the debt,and the cost of the equity is the dividends paid on the stock.Both of these costs are deductible from income when calculating income for tax purposes.
• E) The maximum federal tax rate on personal income in 2018 was 50%.

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Definitions:

Line Current

The current flow in the line supplying a three-phase load.

Apparent Power

A measure of the total power in an AC circuit, expressed in volt-amperes (VA), that combines both real power (measured in watts) and reactive power (measured in volt-amperes reactive, or VARs).

Three-Phase Circuit

An electrical circuit design that uses three alternating currents, each of which reaches its peak value at one third of a cycle from the other, to efficiently supply power.

Phase Values

Phase values pertain to the specific measurements or quantities that characterize each phase in a multiphase electrical system, such as voltage or current levels.