If the after-tax ROR is 11.4% and the corporate Te is 39%, the approximate before-tax rate of return is closest to: (choose one)

(a) 6.8%
(b) 15.4%
(c) 18.7%
(d ) 19.7%


Before-tax ROR = After-tax ROR/(1- Te)
= 11.4%/(1 - 0.39)
= 18.69%

Answer is (c) 18.7%

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