Corporation Growth has $80,000 in taxable income, and Corporation Income has $9,000,000 in taxable income. (Refer to

Question:

Corporation Growth has $80,000 in taxable income, and Corporation Income has $9,000,000 in taxable income. (Refer to Table 2.3.)

a. What is the tax bill for each firm?

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? Why is this amount the same?

Table 2.3

$ Taxable Income 50,000 50,001- 75,000 75,001- 100,000 100,001- 335,000 335,001-10,000,000

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Fundamentals Of Corporate Finance

ISBN: 9780072553079

6th Edition

Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan

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Question Posted: Oct 03, 2023 09:02 AM

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Corporation Growth has $80,000 in taxable income, and Corporation Income has $9,000,000 in taxable income. (Refer to

Question:

$ Taxable Income 50,000 50,001- 75,000 75,001- 100,000 100,001- 335,000 335,001-10,000,000 10,000,001-15,000,000 15,000,001-18,333,333 18,333,334+ Tax Rate 15% 25 34 39 34 35 38 35

Step by Step Answer:

Corporation Growth Taxable income 80000 Tax rate 34 Tax bill 80000 034 27200 ...View the full answer

Fundamentals Of Corporate Finance

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