Below are two potential investment alternatives:
Assume straight-line amortization in all computations, and ignore income taxes.
-The marginal tax rate is
A) the average rate for the company.
B) the highest possible rate the company might be expected to pay.
C) the lowest tax rate applicable to the company.
D) the rate paid on additional amounts of pretax income.

Question

Below are two potential investment alternatives:
  Assume straight-line amortization in all computations, and ignore income taxes.
-The marginal tax rate is
A) the average rate for the company. 
B) the highest possible rate the company might be expected to pay. 
C) the lowest tax rate applicable to the company. 
D) the rate paid on additional amounts of pretax income.

Quizplus · Accepted Answer

The marginal tax rate is the rate paid on the next dollar of taxable income, meaning it applies to additional amounts of pretax income.

Below Are Two Potential Investment Alternatives