Need answer the question Suppose pre-tax earnings are $100,000.00 and the corporate taxrate is 42%. How much additional money can a business ownerreceive by declaring the earnings as personal income which istaxed at a rate of 31%?a. $11,000.00b. $42,000.00c. $31,000.00d. $3,200.00

Pre-tax earnings of a business owner is $100,000Corporate tax rate is 42% & personal income tax…

Answered: Suppose pre-tax earnings are…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section2.A: Taxes

Problem 3P

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Suppose pre-tax earnings are $100,000.00 and the corporate tax rate is 42%. How much additional money can a business owner receive by declaring the earnings as personal income which is taxed at a rate of 31%? a. $11,000.00 b. $42,000.00 c. $31,000.00 d. $3,200.00