Question

Belmont contributes $30,000 to the Salvation Army. Belmont's marginal tax rate is 24% while his average...

Belmont contributes $30,000 to the Salvation Army. Belmont's marginal tax rate is 24% while his average tax rate is 20%. After considering his tax savings, Belmont's contribution costs

A) $7,200.

B) $22,800.

C) $24,250.

D) $30,000.

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Answer #1

Belmont’s contributions costs = His contributions *(1-margianl tax rate)

                    = 30000*(1-24%)

                    = 30000*76%

                    = $22800

Option B is correct

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