Explain Why the Value of IRRafter-Tax Calculated as IRRafter-Tax ≈

question 6

Essay

Explain why the value of IRRafter-tax calculated as IRRafter-tax ≈ IRRbefore-tax * (1 - t)is only an approximation to the actual IRRafter-tax.

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Definitions:

Extinction

In psychology, the gradual weakening and disappearance of a conditioned response when the conditioned stimulus is no longer presented with the unconditioned stimulus.

Lever

A simple machine consisting of a rigid rod or plank that pivots, or rotates, on a fixed point called the fulcrum, used to transmit or apply force.

Pellets

Small, compressed objects or particles, often used as food for pets or as ammunition in air guns.

Discrimination

Bias and discriminatory actions against persons due to their race, age, or gender.