Principles of Corporate Finance (12th Edition) , vhapter 25 task 8p: why do they call it...
Principles of Corporate Finance (12th Edition) , vhapter 25 task 8p: why do they call it pre-tax, then remove 35% tax from that? Like pre-tax is 400, then they take 400*0,65= 260
Homework Answers
Pre tax means an income before the consideration of tax.
Once tax is considered then the income will be post tax.
Post tax= Pre tax income*(1-tax)
Pre tax income= $400
Tax rate= 35%
Post tax income= 400*(1-0.35)= 400*0.65= $260
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