Misty Hancock Is a Sales Rep for a Computer Producer

question 307

Multiple Choice

Misty Hancock is a sales rep for a computer producer. Her salary last year was $30,000, and she earned another $5,000 in sales commissions. She paid $6,000 in taxes, and spent $8,000 on food, housing, a car, and other "necessities." What is Misty's discretionary income?

• A) $21,000
• B) $34,000
• C) $15,000
• D) $24,000
• E) $8,000

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Definitions:

Pre-tax Cash Flow

The amount of cash that a company generates before accounting for taxes, used in assessing financial performance.

After-tax Cash Flow

The net cash flow from business operations or investments after accounting for taxes.

Tax Rate

The rate at which taxes are levied on an individual or a company.

Cost of Capital

The yield a corporation needs to generate from its investment ventures to sustain its market price and appeal to investors.