Consider a System in Which a Person Earning $10, 000

question 81

Multiple Choice

Consider a system in which a person earning $10, 000 pays $1, 000 in taxes, a person earning $25, 000 pays $1, 000 in taxes and a person earning $60, 000 pays $1, 000 in taxes.What type of tax is this?

• A)progressive
• B)proportional
• C)regressive
• D)transgressive
• E)unfair

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Definitions:

Par Value

The face value of a bond or stock, as stated by the issuing company, which does not necessarily reflect market value.

Annual Dividend

The total dividend payment a shareholder receives from a company in one year.

Debt-Equity Ratio

A gauge illustrating the mix between shareholder equity and debt in a company’s asset-financing strategy.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, reflecting the expected cost of all available funding sources.