Mr and Mrs

question 76

Multiple Choice

Mr. and Mrs. Dean own an investment that generated $60,000 cash revenue and required $12,000 cash expenses this year. The Deans' marginal tax rate is 25%. Which of the following statements is true?

• A) If only $52,000 of the revenue is taxable, but all the expenses are deductible, the Deans' after-tax cash flow is $40,000.
• B) If the revenue is taxable, but only $8,500 of the expenses are deductible, the Deans' after-tax cash flow is $38,625.
• C) The Deans' before-tax cash flow is $48,000.
• D) Both if the revenue is taxable, but only $8,500 of the expenses are deductible, the Deans' after-tax cash flow is $38,625 and the Deans' before-tax cash flow is $48,000.

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Definitions:

Psychosis

A mental disorder where thought and emotions are so impaired that contact is lost with external reality.

Paranoia

A psychological state in which individuals experience false beliefs of being persecuted, unnecessary feelings of jealousy, or an inflated sense of self-worth.

Depression

A mental health disorder marked by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.

Psychosomatic

Referring to physical symptoms that are caused or significantly influenced by psychological factors, such as stress or anxiety.