--%>

Why do financial managers compute the marginal tax rate

Why do financial managers compute the marginal tax rate?
Financial managers utilize marginal tax rates to estimate the future after tax cash flows from investments.  Because they are interested in how much of the next dollar earned through new investments will need to be paid in taxes, they employ the marginal tax rate (instead of the average tax rate) to compute the tax liability.

   Related Questions in Finance Basics

  • Q : Describe trustworthy collateral from

    Describe trustworthy collateral from the lenders' perspective? Describe whether accounts receivable and inventory are trustworthy collateral. Assets which are readily marketable, of stable value, and not likely to "disappear" make for trustwort

  • Q : How do flotation costs influence the

    Normal 0 false false

  • Q : In which ratios long-term bond investor

    Which ratios would a potential long-term bond investor is most interested in? Describe. Current & potential lenders of long-term funds, such like banks & bondholders, are interested in debt ratios.  While a business's debt ratios ri

  • Q : What is Expenditure Authority

    Expenditure Authority: The authorization to make expenditure (generally by a budget act appropriation, provisional language or some other legislation).

  • Q : Describes why reserves are an asset to

    Normal 0 false false

  • Q : What is Minor Capital Outlay Minor

    Minor Capital Outlay: The construction projects or tools needed to finish a construction project, estimated to cost less than $600,000 bonus any escalation per Public Contract Code 10108.

  • Q : Influence of opportunity costs How do

    How do opportunity costs influence the capital budgeting decision-making procedure? Opportunity costs reflect the foregone benefits of alternative not selected when a capital budgeting project is chosen. Any decrease in the cash flows of the fi

  • Q : Define the term Unencumbered Balance

    Define the term Unencumbered Balance: It is the balance of an appropriation not so far committed for particular purposes.

  • Q : Define Reimbursements Reimbursements :

    Reimbursements: The amount received as a payment for the cost of services executed, or of other expenditures made for, or on behalf of, other entity (example, one department reimbursing the other for administrative work executed on its behalf). Reimbu

  • Q : Equilibrium GDP for this hypothetical

    Normal 0 false false