Question

This year, Fig Corporation made a $100,000 contribution to charity. In each of the following situations, compute the after-tax cost of this contribution assuming that Fig uses a 6 percent discount rate to compute NPV.
a. Fig had $8 million taxable income before consideration of the contribution.
b. Fig had $490,000 taxable income before consideration of the contribution. Next year, Fig’s taxable income is $6 million, and it makes no charitable contributions.
c. Fig had $190,000 taxable income before consideration of the contribution. For the next five years, Fig’s annual taxable income is $130,000, and it makes no charitable contributions.


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  • CreatedNovember 03, 2015
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