MsKent Has $200,000 in an Investment Paying 8% Annual Interest

question 58

Multiple Choice

Ms.Kent has $200,000 in an investment paying 8% annual interest.Her marginal tax rate is 40%.Which of the following statements is false?

• A)Ms.Kent's annual before-tax cash flow from this investment is $16,000.
• B)If the interest is tax-exempt,Ms.Kent's annual after-tax cash flow is $16,000.
• C)If the interest is taxable,Ms.Kent's annual after-tax cash flow is $6,400.
• D)None of the above is false.

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