Daniel, Who Is Single, Estimates That the Profits of His

question 78

True/False

Daniel, who is single, estimates that the profits of his business for the current tax year will be $200,000; he has no other sources of gross income. Since the 21% corporate rate is less than Daniel's marginal rate of 32%, he would save taxes operating the business as a C corporation.

---

Definitions:

Intrinsic Value

The actual value of a company or an asset based on underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.

P/E Multiple

Price-to-Earnings ratio, a valuation metric calculated by dividing the current market price of a stock by its earnings per share, indicating how much investors are willing to pay per dollar of earnings.

EPS

Earnings Per Share; a company's profit divided by its number of common outstanding shares, indicating the company’s profitability.

Intrinsic Value

The perceived or calculated true value of an asset, investment, or company based on fundamentals and independent of market price.