Just as It Is Important for an Investor to Consider

question 16

Multiple Choice

Just as it is important for an investor to consider the impact of financial leverage on her return, it is also necessary to account for the effect of income taxes. How would the presence of income taxes impact the levered going-in IRR?

• A) Income taxes increase the levered going-in-IRR
• B) Income taxes reduce the levered going-in-IRR
• C) Income taxes do not affect the going-in-IRR
• D) Income taxes cause the levered going-in-IRR to become invalid as a measure of return.

---

Definitions:

Output

The total amount of goods or services produced by a company, sector, or economy.

Normative Questions

Questions that address what should be, focusing on value judgments and opinions rather than empirical facts.

Value Judgments

Assessments or opinions based on individual beliefs about what is important or desirable, often influencing decisions and policies.

Positive Economic

Refers to an approach or analysis based on factual data and observable outcomes, without subjective judgments or opinions influencing the conclusions.