The marginal income tax rate is 46.8% and before tax rate of return is 15.5% then the after tax rate of return is _____________?
Correct answer: B. 0.08246
- A. 0.0725
- B. 0.08246
- C. 0.1025
- D. 0.0925
Explanation
Applying the tax adjustment gives 15.5% × (1 − 0.468) = 8.246%, expressed as 0.08246. The tax rate reduces, rather than adds to, the before-tax return.
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