When comparing a "pre-tax cost" and an "after-tax cost", which of the following is true?
A) The after-tax cost will be greater than the pretax cost.
B) They will be the same amount.
C) The pre-tax cost will be greater than the after-tax cost.
D) The higher the tax rate, the lower the difference in the amount between them.

Question

Quizplus · Accepted Answer

Pre-tax cost refers to the cost before any taxes are applied, while after-tax cost takes into account the taxes paid. Therefore, the pre-tax cost will always be greater than the after-tax cost since taxes reduce the overall cost. The higher the tax rate, the greater the difference between the pre-tax and after-tax cost.

When Comparing a "Pre-Tax Cost" and an "After-Tax Cost", Which