Answered: Which of the following formulas can be…

Which of the following formulas can be used to represent targeted pretax profit, πB, as a function of targeted after-tax profit, πA, given an effective income tax rate of t?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 2aM

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Question

Which of the following formulas can be used to represent targeted pretax profit, π_B, as a function of targeted after-tax profit, π_A, given an effective income tax rate of t?

Multiple Choice

π_B = π_A/(1 - t)
π_B = π_A × (1 + t)
π_B = FC/(1 − t)
π_B = (1 + t)/π_A
π_B = π_A × (1 − t)

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