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In the Formula for Return on Investment,interest Expense Is Multiplied

Question 50

Multiple Choice

In the formula for return on investment,interest expense is multiplied by (1 - tax rate) .Why is this adjustment made?


A) Interest is not tax deductible
B) Debt is excluded from the denominator
C) Net income in the formula is after tax
D) Dividends are not deductible for tax purposes
E) None of the answers are correct.

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