Assuming That the Corporation Has a 34% MTR,which of the Following

question 16

Multiple Choice

Assuming that the corporation has a 34% MTR,which of the following statements is true?

• A)Jacky,Inc.borrowed $500,000 and paid interest of $48,000; the after-tax cost of the interest was $31,680.
• B)Jacky,Inc issued 1,000 shares of 7%,$100 par preferred stock for $100,000.The after-tax cost of the $7,000 dividend paid was $4,620.
• C)Jacky,Inc issued 1,000 shares of 7%,$100 par preferred stock for $100.The after-tax cost of the $7,000 dividend paid was $2,380.
• D)Jacky,Inc.borrowed $500,000 and paid interest of $48,000; the after-tax cost of the interest was $16,320.

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Definitions:

Intermediate Goods

Products used as inputs in the production of other goods or services, such as raw materials or components, which are not finished goods sold to end consumers.

Deflation

A drop in the overall pricing of goods and services, typically signaling a shrinkage in the money or credit available in the economy.

National Income

The total value of all the goods and services produced by a country’s economy in a specific period, including income from foreign investments.

Gross Investment Expenditures

The total amount spent on new capital assets, before accounting for depreciation.