MsLeik Has $50,000 in an Investment Paying 10% Annual Interest

question 27

Multiple Choice

Ms.Leik has $50,000 in an investment paying 10% annual interest.Each year,she incurs a $600 cash expense relating to the investment.If Ms.Leik's marginal tax rate is 20%,which of the following statements is true?

• A)Ms.Leik's annual after-tax cash flow from this investment is $3,520.
• B)If the interest is taxable but the expense is not deductible,Ms.Leik's annual after-tax cash flow from the investment is $3,400.
• C)If the interest is tax-exempt and the expense is not deductible,Ms.Leik's annual after-tax cash flow is $5,000.
• D)None of the above is true.

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Definitions:

Power Assertion

A disciplinary technique that involves the use of authority or physical force to control or correct a child's behavior.

Forced Insistence

Involves compelling someone to accept an idea or condition through persistent pressure or demand.

Method of Induction

A logical process in which multiple premises, gathered through observations, are combined to obtain a general conclusion.

Restrictive Techniques

Methods or strategies used to limit certain behaviors, activities, or engagement in specific contexts.