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June 2013 question 4

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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December 5, 2015 at 4:14 am #287709
farhana001
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June 2013 question 4 b
Can you explain the tax part
The before tax and after tax income
December 5, 2015 at 9:42 am #287772
John Moffat
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They are investing $3.2M and the question says they earn a pre-tax return of 18%.
So earnings before tax increase by 18% x $3.2M
There is tax at 20%, and to after-tax the earnings increase by 80% of 18% x $3.2M
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