Which of the Following Statements Is CORRECT

question 35

Multiple Choice

Which of the following statements is CORRECT?

• A) The maximum federal tax rate on personal income in 2014 was 50%.
• B) Since companies can deduct dividends paid but not interest paid,our tax system favors the use of equity financing over debt financing,and this causes companies' debt ratios to be lower than they would be if interest and dividends were both deductible.
• C) Interest paid to an individual is counted as income for tax purposes and taxed at the individual's regular tax rate,which in 2014 could go up to 35%,but dividends received were taxed at a maximum rate of 15%.
• D) The maximum federal tax rate on corporate income in 2014 was 50%.
• E) Corporations obtain capital for use in their operations by borrowing and by raising equity capital,either by selling new common stock or by retaining earnings.The cost of debt capital is the interest paid on the debt,and the cost of the equity is the dividends paid on the stock.Both of these costs are deductible from income when calculating income for tax purposes.

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Definitions:

Semantic Memory

A memory system proposed by Tulving that is thought to hold memories of general knowledge.

Procedural Memory

Procedural memory is a type of long-term memory responsible for knowing how to perform different actions and skills.

ACT Models

A theoretical framework in cognitive psychology that stands for Adaptive Control of Thought, describing cognitive processes as interactions between declarative and procedural memory.

Procedural Memory

A type of long-term memory involved in the acquisition of skills and habits, responsible for knowing how to do things and perform certain tasks without conscious awareness of these previous experiences.