Sunday
September 21, 2014

Homework Help: Public Finance

Posted by Mel on Saturday, January 29, 2011 at 9:01pm.

A corporation has $7 mil. in equity. During the tax year it takes in $4 million in receipts and earns $ 2 million in capital gains from sale of subsidiary. It incurs labor costs of $1 million, interest costs of $250,000, material costs of $500,000, and pays rent for structure of $250,000.

Calculate the corporation's total accounting profit and assuming that the profit is fully taxable, calculate its tax liability using the tax rates in this table:

Taxable income ATR at begin. of bracket MTR
less than 50,000 0% 15%
more than 50,000 but less than 75,00 15% 25%
more than 75,000 but less than 10 million 18% 34%
more than 10 mil. 34% 35%


Calculate the ATR (annual tax rate) of the corporation as a percentage of its economic profit, assuming that the opportunity cost of capital is 8%.

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

finance - Faulkner's Fine Fries, Inc. (FFF), is thinking about reducing its debt...
corporate finance - Life Balance, Inc. has found that its cost of common equity ...
Macroeconomics - Kelly purchased ten shares of Gentech stock for $200 in year 1 ...
Principles of finance - Faulkner’s Fine Fries Inc (FFF) is thinking about ...
tax accounting - bruce wilson won 2 million in the state lottery. the lottery ...
finance - ATM Banc has the following liabilities and equity categories: Deposits...
I need HELP bad! Macroeconomics! - 1). Kelly purchased ten shares of Gentech ...
Macroeconomics - 1). Kelly purchased ten shares of Gentech stock for $200 in ...
Accounting, TAX - Which of the following entities may not use the cash method of...
Finance - A firm has debt with a market value of $40 million and an equity value...

Search
Members