How much explicit tax would Curtis incur on interest earned on the Initech, Inc. bond?
A) $16,200
B) $6,300
C) $4,900
D) $12,600
E) None of these

Question

Quizplus · Accepted Answer

To calculate the explicit tax on interest earned on the bond, we need to multiply the interest earned by Curtis's tax rate, which is 35%. 
The interest earned on the bond is $18,000 (6% of $300,000), and 35% of $18,000 is $6,300. Therefore, the explicit tax on interest earned on the Initech, Inc. bond is $6,300.

How Much Explicit Tax Would Curtis Incur on Interest Earned