After-tax net income can be calculated as follows:
A) After-tax income = Pretax income * Tax rate
B) After-tax income = Pretax income / (1 - Tax rate)
C) After-tax income = Pretax income * (1 + Tax rate)
D) After-tax income = Pretax income * (1 - Tax rate)

Question

Quizplus · Accepted Answer

After-tax income is calculated by multiplying the pretax income by (1 minus the tax rate), which effectively subtracts the taxes owed from the pretax income.

After-Tax Net Income Can Be Calculated as Follows