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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Definitions:

Organ

A part of the body composed of tissues that perform a specific function or group of functions, such as the heart, liver, or lungs.

Hepatic Duct

A duct in the liver that transports bile from the liver to the gallbladder and duodenum.

Common Bile Duct

The duct that conveys bile from the liver and the gallbladder to the duodenum.