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andrey2020 [161]
3 years ago
8

A corporation in a 40% tax bracket invests in the preferred stock of another company and earns a 5% pretax rate of return. An in

dividual investor in a 20% tax bracket invests in the same preferred stock and earns the same pretax return. The after-tax return to the corporation is ________, and the after-tax return to the individual investor is
Business
1 answer:
Allushta [10]3 years ago
4 0

Answer:

The after-tax return to the corporation is __3%______, and the after-tax return to the individual investor is 4%.

Explanation:

A. The after-tax return is the return that is earned by the corporation or individual after the deduction of income tax.  Since the corporation and the individual are in different tax brackets, you will normally expect them to earn different after-tax returns.

B. Calculation of the after-tax returns:

After-tax return = Pre-tax return minus income tax

1. Corporation = (100% - 40%) x 5% = 3%

2. Individual = (100% - 20%) x 5% = 4%

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on its advertisement, a company claims that it has funds in its possession that are in fact not available for payment of losses
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Misrepresentation.

Explanation:

In this scenario, on its advertisement, a company claims that it has funds in its possession that are in fact not available for payment of losses or claims. The company is guilty of misrepresentation.

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3 years ago
Classification shifting by managers leads to under-reporting of total expenses and over-statement of bottom-line net income.
Step2247 [10]

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The statement in the question is false as classification shifting by managers doesn't lead to under-reporting of total expenses and over-statement of bottom-line net income rather it lead to over reporting.

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