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:

Human Resource

The department within an organization that deals with recruitment, management, and development of its employees.

Human Capital

The collective skills, knowledge, and expertise that individuals possess, which can be utilized to create economic value.

Economic Output

The total value of all goods and services produced by an economy over a specific time period.

Labor

The human effort, including both physical and mental capabilities, utilized in the production of goods and services.