Last year your construction company had operating revenues of $1,240,000, operating costs of $520,000 and a CCA of $98,000 based upon existing assets The beginning of that same year the company bought essential new equipmen for $130,000. This equipment has a CCA rate of 30%. The company has borrowed money and is paying $18,000 per year in interest. Interest paid on borrowed money is tax deductible, so it reduces the taxable income. You also managed somehow to deduct the first-class flight tickets for all the vice- presidents and their spouses on a business trip to Cancun, Mexico, which cost total of $50,000. The tax rate is 37.62%. Taxable income is close to:

Last year your construction company had operating revenues of $1,240,000, operating costs of $520,000 and a CCA of $98,000 based upon existing assets The beginning of that same year the company bought essential new equipmen for $130,000. This equipment has a CCA rate of 30%. The company has borrowed money and is paying $18,000 per year in interest. Interest paid on borrowed money is tax deductible, so it reduces the taxable income. You also managed somehow to deduct the first-class flight tickets for all the vice- presidents and their spouses on a business trip to Cancun, Mexico, which cost total of $50,000. The tax rate is 37.62%. Taxable income is close to:

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 11P

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