If Julius has a 30% tax rate and a 10% after-tax rate of return, a $40,000 tax deduction in two years will save how much tax in todays dollars (rounded)?

If Julius has a 30% tax rate and a 10% after-tax rate of return, a $40,000 tax deduction in two years will save how much tax in todays dollars (rounded)?

If Julius has a 30% tax rate and a 10% after-tax rate of return, a $40,000 tax deduction in two years will save how much tax in todays dollars (rounded)?


A. $40,000

B. $9,912

C. $33,040

D. $12,000

E. None of these


Answer: B


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