Triangle Associates is contemplating making a large charitable contribution.If their tax rate is 35 per cent,what is the after-tax cost of making a $20 000 contribution?
A) $27 000
B) $ 7000
C) $20 000
D) $13 000

Question

Quizplus · Accepted Answer

The after-tax cost of the contribution can be calculated as follows:
Tax savings = (donation amount) x (tax rate) = $20,000 x 0.35 = $7,000
After-tax cost = (donation amount) - (tax savings) = $20,000 - $7,000 = $13,000. 
Therefore, the after-tax cost of making the $20,000 contribution is $13,000 (Option D).

Triangle Associates Is Contemplating Making a Large Charitable Contribution