Suppose That the After-Tax Interest Rate Is 10%, and the Corporate

question 22

Multiple Choice

Suppose that the after-tax interest rate is 10%, and the corporate tax rate is 50%. What is the before-tax interest rate?

• A)40%
• B)20%
• C)15%
• D)10%
• E)5%

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Definitions:

Ordinary Care

The reasonable level of care, diligence, and judgment that a person in a particular profession is expected to exercise under specific circumstances.

Internal-Unstable

Attributes in attributing causation for an event or behavior to factors inside a person that can change, such as effort or mood.

External-Stable

An attributional pattern where success or failure is attributed to enduring factors outside an individual's control.

Cognitive Inconsistency

The state of having contradictory thoughts, beliefs, or attitudes, especially relating to behavioral decisions and attitude change.