Jessica plans to invest $150,000 in a second business. She expects to generate a 12 percent before-tax

Question:

Jessica plans to invest $150,000 in a second business. She expects to generate a 12 percent before-tax return on her investment the first year. Her marginal tax rate is 25 percent due to the income from her other business. She needs to decide whether to establish this second business as a sole proprietorship or a C Compute the after-tax cash flow from a sole proprietorship if she withdraws 50 percent of the profits from the business the first year. (Ignore employment taxes.)
b. Compute the after-tax cash flow from a C if she receives a equal to 50 percent of the before-tax profits from the business the first year.
c. What nontax factors should Jessica consider in making this decision?
d. What do you recommend? Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...