If Rudy has a 25% tax rate and a 6% after-tax rate of return, a $30,000 tax deduction in four years will save how much tax in today's dollars? Use Exhibit 3.1. (Round present and future value amounts to 3 places)
A) $30,000.
B) $7,500.
C) $23,760.
D) $5,940.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

$30,000 × 0.25 (tax rate) × 0.792 (Discount Factor, 6%, 4 years) = $5,940.

If Rudy Has a 25% Tax Rate and a 6