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Please do not copy from Chegg. I need an original answer with proper explanation with step by step explanation. Jessica plans to invest $150.000 in
Please do not copy from Chegg. I need an original answer with proper explanation with step by step explanation.
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 propri-etorship or a C corporation. a. 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 corporation if she receives a dividend 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 recommendStep by Step Solution
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