If the after-tax rate of return for a cash flow series is 11.2% and the corporate effective tax rate is 39%, the approximated before-tax rate of return is closest to: (choose one)
(a) 6.8%
(b) 5.4%
(c) 18.4%
(d ) 28.7%
Before-tax ROR = after-tax ROR/(1 - Te)
= 11.2%/(1 - 0.39)
= 18.36%
Answer is (c) 18.4%
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