Pear, an individual, plans to start a small business, which will operate as a corporation. In year 0, she expects the corporation togenerate an ordinary loss of $950,000. Subsequently, she expects the corporation to be profitable, and projects ordinary profit of$1.425,000 in year 1, and $2,375.000 in year 2. Pear's personal marginal tax rate on ordinary income is 37%. Assuming a corporatetax rate of 21% and a 10% discount rate, calculate the present value of expected tax costs on the business earnings for the first 3years of operations if the business does not make an S corporation election Assume the excess business loss limitation does notapply. Round your discount rate calculations to three decimal places.O sas3,623O $896,325O $1.128,600O $502.640

All sorts of future cash flows in respect of adding interest on present value are known as the…

Answered: O $853,623 O $896,325 O$1.128,600

Business

Accounting

O $853,623 O $896,325 O$1.128,600

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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