General Corporation Is Taxable in a Number of States

question 136

Multiple Choice

General Corporation is taxable in a number of states. This year, General made a $100,000 sale from its A headquarters to an agency of the U.S. government. State A applies a throwback rule. In which state(s) will the sale be included in the sales factor numerator?

• A) $0 in A.
• B) $50,000 in A, with the balance exempted from other states' sales factors under the Colgate doctrine.
• C) $100,000 in A.
• D) In all of the states, according to the apportionment formulas of each, as the U.S. government is present in all states.

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Definitions:

Dividend Growth Model

A valuation method used to predict the price of a company's stock by using projected dividends and discounting them back to present value.

Retained Earnings

The portion of a company's profits that is retained or re-invested in the business instead of being paid out as dividends to shareholders.

Marginal Cost Of Capital

The cost of obtaining an additional dollar of new capital, which can influence investment and financing decisions.

Investment Opportunity Schedule

A curve depicting the relationship between the required rate of return on investments and the total amount of investment, illustrating how much investment can be undertaken for a given return.