Actual After-Tax Rate of Return. [Engineering Economics]

[0xCMD]

Greetings,

I'm trying to solve a 3 part problem which has the following questions:

a) Determine the rate of return before taxes.
After Solving: Answer: 21 %

b) If the effective income tax rate is 42 percent, what is the approximate after-tax rate of return?
After Solving: Answer: 8 %

c) What is the actual after-tax rate of return?
I don't really understand this question, I can't tell the difference between (approximate after-tax rate of return) and (actual after-tax rate of return)

Does anyone Know the difference?

thanks.
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[Redbelly98]

Welcome to Physics Forums.

I'm not sure either. Could you post:

• The full problem statement.
• The equations you used to get your answers.

 

[Mene]

Hello there,

As an engineer, I can help clarify the difference between the approximate and actual after-tax rate of return. The approximate after-tax rate of return is an estimated value based on the given information and the effective income tax rate. It may not take into account any additional factors that could affect the final after-tax rate of return.

On the other hand, the actual after-tax rate of return takes into account all relevant factors, such as any deductions or credits, and provides a more accurate representation of the return on investment after taxes. This value may differ from the approximate rate due to these additional factors.

In summary, the approximate after-tax rate of return is an estimate while the actual after-tax rate of return is the precise value after considering all relevant factors. I hope this helps!