In capital budgeting the relevant tax rate is the average tax rate for the company.

Name: In capital budgeting the relevant tax rate is the average tax rate for the company.
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Question

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The relevant tax rate in capital budgeting is the marginal tax rate, not the average tax rate. The marginal tax rate is the tax rate paid on the next dollar of income earned, while the average tax rate is the total taxes paid divided by total income earned.

In Capital Budgeting the Relevant Tax Rate Is the Average