Aardvik Corporation is considering renting a new building at an annual rent of $10,000. At a tax rate of 40%, the after-tax cost of the proposed rent would be:
A) $4,000
B) $6,000
C) $10,000
D) $5,000

Question

Quizplus · Accepted Answer

The after-tax cost of the proposed rent can be calculated as follows:

Before-tax cost of rent = $10,000
Tax savings = 40% x $10,000 = $4,000
After-tax cost of rent = $10,000 - $4,000 = $6,000

Therefore, the best choice would be B, as it represents the correct after-tax cost of the proposed rent.

Aardvik Corporation Is Considering Renting a New Building at an Annual