J&J Electric Company expects to have taxable income of $320.000 from itsregular business over the next two years. The company is considering a new residential wiring project for a proposed apartment complex during year 0. This two-year project requires the purchase of new equipment for $30.000. ·me equipment falls into the MACRS five-year class. The equipment will be sold after two years for $12,000. The project will bring in additional revenue of$ I 00,000 each year, but it is expected to incur an additional operating cost of $40,000 each year. What is the income tax rate to use in the year I for this project evaluation?(a) 39%(b) 34%(c) 33.77%(cl) 35.39%
J&J Electric Company expects to have taxable income of $320.000 from itsregular business over the next two years. The company is considering a new residential wiring project for a proposed apartment complex during year 0. This two-year project requires the purchase of new equipment for $30.000. ·me equipment falls into the MACRS five-year class. The equipment will be sold after two years for $12,000. The project will bring in additional revenue of$ I 00,000 each year, but it is expected to incur an additional operating cost of $40,000 each year. What is the income tax rate to use in the year I for this project evaluation?(a) 39%(b) 34%(c) 33.77%(cl) 35.39%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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J&J Electric Company expects to have taxable income of $320.000 from its
regular business over the next two years. The company is considering a new residential wiring project for a proposed apartment complex during year 0. This two-year project requires the purchase of new equipment for $30.000. ·me equipment falls into the MACRS five-year class. The equipment will be sold after two years for $12,000. The project will bring in additional revenue of$ I 00,000 each year, but it is expected to incur an additional operating cost of $40,000 each year. What is the income tax rate to use in the year I for this project evaluation?
(a) 39%
(b) 34%
(c) 33.77%
(cl) 35.39%
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