Refer to the Tax Rate Table below (or Table 2.3 in the book). Corporation Growth has$92000 in taxable income. Suppose Corporation Growth has identified a new projectthat will increase taxable income by $71,917. How much in additional taxes willCorporation Growth pay?TABLE 2.3 Corporate tax ratesTaxable Income0-50,00050,001-75,00075,001- 100,000100,001-335,000335,001- 10,000,00010,000,001 15,000,00015,000,001 18,333,33318,333,334+Tax Rate15%25343934353835

Income tax is charged on the taxable income of the corporation. It can be calculated on the basis of…

Answered: Refer to the Tax Rate Table below (or…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 7P

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Similar questions

Corporation Growth has $86,000 in taxable income, and Corporation Income has $8,600,000 in taxable income. Use the tax rates from Table 2.3. a. What is the tax bill for each firm? Firms Tax Bill Corporation Growth $ Corporation Income $ b. Suppose both firms have identified a new project that will increase taxable income by $10,000. How much in additional taxes will each firm pay? Firms Additional taxes Corporation Growth $ Corporation Income $
1 Calculate the Tax implications if the company has earnings before taxes of $ 350,000.00 Both if the company is a Corporation or Sole proprietorship What is the total taxes, average rate and the marginal tax rate Corporate Tax Rate: Total Taxes as Coorporation Personal Marginal Income Tax Rates: Single: Taxable Income Over--- 0 9,525 38,700 82,500 157,500 200,000 500,000 Total Tax Paid Marginal Tax Rate Average Tax Rate Taxable Income 350000 But not over Over--- 0 9,525 38,700 82,500 157,500 200,000 500,000 === 9,525 38,700 82,500 157,500 200,000 500,000 But not over --- 9,525 38,700 82,500 157,500 200,000 500,000 Marginal Tax Rate 10% 12% 22% 24% 32% 35% 37% Marginal Tax Rate 10% 12% 22% 24% 32% 35% 37% 21% Difference Incremental Taxes Cumulative Taxes
1) Suppose your firm earns $9 million in taxable income.What is the firm's tax liability?What is the average tax rate?What is the marginal tax rate? 50,000 15%50,001 - 75,000 25%75,001- 100,000. 34%100,001-335,000 39%335,001-10,000,000 34%10,000,001-15,000,000. 35%15,000,001-18,333,333 38%18,333,334- 34% ....................................... 2) Entity X earns 6 $ per share. If the discount rate or equity cost to be applied by the company is 20% and the investment profitability is 16%;a) According to the Walter formula, what would the price of shares be in $ if the business had distributed 50% profit? b) According to Walter, is this the optimum rate of dividend distribution? Explain
Refer to the corporate marginal tax rate information in Table 2.3 . b-1 Compute the average tax rate for a corporation with exactly $335,001 in taxable income. Average tax rate % b-2 What is the average tax rate for a corporation with exactly $18,333,334? Average tax rate % c. The 39 percent and 38 percent tax rates both represent what is called a tax “bubble.” Suppose the government wanted to lower the upper threshold of the 39 percent marginal tax bracket from $335,000 to $216,000. What would the new 39 percent bubble rate have to be? (Round your answer to 2 decimal places. (e.g., 32.16)) Bubble rate %
Example: Marginal Vs. Average Rates Suppose your firm earns $4 million in taxable income. What is the firm's tax liability? ● ● What is the average tax rate? What is the marginal tax rate? 50,000*0.15 25,000*0.25 25000*0.34 235000*0.39 (4,000,000-335,000) *0.34 Total tax liability Average tax rate Marginal tax rate 7,500 6,250 8,500 91,650 1,246,100 1,360,000 If f you are considering a project that will increase the firm's taxable income by $1 million, what tax rate should you use in your analysis? Is it marginal or average tax rate that is normally relevant for financial decision making? 34% 34%
Using the 2020 corporate tax rate: a. What are the tax liability, the marginal tax rate, and the average tax rate for a corporation with $248,300 taxable income? b. What are the tax liability, the marginal tax rate, and the average tax rate for a corporation with $39,253,000 taxable income?
Given the information below, what is the marginal tax rate if a firm has taxable income of $160,000? Taxable Income Tax Rate 0- 50,000 15% 50,001- 75,000 25% 75,001- 100,000 34% 100,001- 335,000 39%
Using the Corporated Federal Income Tax Rate (2006), calculate the federal income tax that should be paid by a company that has a gross income of $250,000, expenses of $70,000, and depreciation of $20,000 O a. $22,250 O b. $160,000 Oc $45,650 O d. $62,400
Given this tax table, what is the average tax rate for a firm with taxable income of $160,000? Taxable Income Tax Rate 0- 50,000 15% 50,001- 75,000 25% 75,001- 100,000 34% 100,001- 335,000 39%
Compressed APV with Nonconstant Growth Sheldon Corporation projects the following free cash flows (FCFS) and interest expenses for the next 3 years, after which FCF and interest expenses are expected to grow at a constant 5% rate. Sheldon's unlevered cost of equity is 15% its tax rate is 25%. Year 1 2 3 Free cash flow ($ $20.0 $30.0 $40.0 millions) Interest expense ($ $12.8 $14.4 $16.0 millions) Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.
Suppose a firm in the 40% federal-plus-state tax bracket needs to pay $1 in dividends to its shareholders. What is the pretax income it should have to pay this dividend? $1.00 $1.67
The tax rates for a particular year are shown below: $0 - 50,000 Taxable Income Tax Rate 15 % 25 % 34 % 50,00175,000 75,001 100,000 - 100,001 - 335,000 39 % What is the average tax rate for a firm with taxable income of $125,013? (enter just the numbers. e.g., enter 15.56% as 15.56.)

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