MrBlau Structured an Income-Generating Transaction So That the $90,000 Income

question 38

Multiple Choice

Mr.Blau structured an income-generating transaction so that the $90,000 income and cash flow shifted to Mr.Blau's sister,Kim.If Mr.Blau's marginal tax rate is 35%,and Kim's tax rate is 15%,compute the tax savings from the income shift.

• A)$13,500
• B)$21,500
• C)$31,500
• D)None of the above

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Definitions:

Weighted Average

An analysis that incorporates the diverse levels of relevance of the numbers within a dataset.

Discount Rate

The discount rate applied in discounted cash flow analysis to calculate the current value of expected future cash flows.

Investment Project

A project undertaken by an individual or company involving an investment of resources aimed at generating financial returns.

Cost Of Capital

The rate of return that a business must achieve to generate value for its investors, essentially the cost of raising funds through debt or equity.