Question

Company G, which has a 30 percent marginal tax rate, owns a controlling interest in Company J, which has a 12 percent marginal tax rate. Both companies perform engineering services. Company G is negotiating a contract to provide services for a client. Upon satisfactory completion of the services, the client will pay $85,000 cash. Compute the after-tax cash from the contract assuming that:
a. Company G is the party to the contract and provides the services to the client.
b. Company J is the party to the contract and provides the services to the client.
c. Company J is the party to the contract but Company G actually provides the ser-vices to the client.


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  • CreatedNovember 03, 2015
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