Using the corporate tax rate schedule given in Table, perform the following:

a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of corporate earnings before taxes: $10,000; $80,000; $300,000; $500,000; $15 million; $10 million; and S20 million.

b. Plot the average tax rates (measured on the y axis) against the pretax income levels (measured on the x axis). What generalization can be made concerning the relationship between thesevariables?

Tax calculation Range of taxable income Base tax + (Marginal rateX amount over base bracket) 0 (15% amount over $ 0 ro $50,000 50,000 to7S,000 75,000 to 100,000 100,000 to 335,000 S 50,000) 13,750 (34 Xamoun ovr 5,000) 22,250 + (39 Xamount over 100,000) 335,000 to 10,000,000 113,900 (34 Xamount over 335,000) 10,000,000 to 15,000,000 3,400,000 35 Xamount over 10,000,000) 15,000,000 to 18,333,333 5,150,000 3 Xamount over 15,000,000) 6,416,667+ (35 Xamount over 18,333,333) 7-500 (25 Xamount over Over 18,333,333