If Julius has a 20% tax rate and a 10% after-tax rate of return, $25,000 of income in three years will cost him how much tax in today's dollars? Use Exhibit 3.1. (Round present and future value amounts to 3 places)
A) $3,755.
B) $18,775.
C) $5,000.
D) $25,000.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

$25,000 × 0.20 (tax rate) × 0.751 (Discount Factor, 10%, 3 years) = $3,755.

If Julius Has a 20% Tax Rate and a 10