If the US Government Were Able to Eliminate All Possible Corporate Tax

question 47

Multiple Choice

If the U.S. government were able to eliminate all possible corporate tax avoidance schemes, which of the following is likely to occur?

• A)Investors in U.S. corporations will be better off.
• B)Investors in U.S. corporations will be worse off.
• C)More corporations will want to be domiciled in the U.S. because they will face a fairer competitive environment.
• D)Both B and C are likely to occur.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often in the context of investment appraisal or determining the net present value.

Net Present Value

The difference between the present value of cash inflows and outflows over a period, used in capital budgeting to assess profitability of investments.

Working Capital

The difference between a company's current assets and its current liabilities.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, where the asset's cost is evenly spread over its useful life.