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Problem 2: Tax Dilemma You are an investor looking at two options. The first option is a to buy a sole proprietorship with pre-tax income

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Problem 2: Tax Dilemma You are an investor looking at two options. The first option is a to buy a sole proprietorship with pre-tax income 250,000$. The second option, is to acquire 10% of a corporation with pre-tax income 2,500,000\$, which distributes all after-tax profits as dividends. You are a single filer (tax schedule provided in Problem 1), the corporate tax rate is 21% and dividends are subject to a 20% tax rate at the shareholder level. 1. What would be the average tax rate if you invest in the sole proprietorship? 2. What would be your after-tax income if you invest in the sole proprietorship? 3. What would be the effective tax rate if you choose to invest in the corportion. 4. What would be your after-tax income if you invest in the corporation

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