Omar's after-tax cost of the expense if omar's marginal tax rate is 40% would be $16,800
It is the amount of additional tax paid for every additional dollar earned as income. The average tax rate is the total tax paid divided by total income earned. A 10% marginal tax rate means that 10 cents of every next dollar earned would be taken as tax.
How to calculate the after-tax cost of the expense?
Calculation of after tax cost =
Before tax cost - tax savings
= 24,000 - (18,000 * 40%)
= $16,800
Therefore, the after tax cost of the expense is $16,800.
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