Problem 17.047 A division of Midland Oil & Gas has a taxable income (TI) of $9.35 million for a tax year. If the state tax rate averages 7% for all states in which the corporation operates, find the equivalent after-tax rate of return (ROR) required of projects that are justified only if they can demonstrate a before-tax return of 22% per year. Use the table given below to calculate taxes, the average tax rate Te and after-tax ROR. If Taxable Income ($) Is: Over But Not over Tax Is Of the Amount over 0 50,000 15% 0 50,000 75,000 7,500 + 25% 50,000 75,000 100,000 13,750 + 34% 75,000 100,000 335,000 22,250 + 39% 100,000 335,000 10,000,000 113,900+34% 335,000 10,000,000 15,000,000 3,400,000+ 35% 10,000,000 15,000,000 18,333,333 5,150,000+38% 15,000,000 18,333,333 35% 0 The equivalent after-tax ROR is determined to be %.

Problem 17.047 A division of Midland Oil & Gas has a taxable income (TI) of $9.35 million for a tax year. If the state tax rate averages 7% for all states in which the corporation operates, find the equivalent after-tax rate of return (ROR) required of projects that are justified only if they can demonstrate a before-tax return of 22% per year. Use the table given below to calculate taxes, the average tax rate Te and after-tax ROR. If Taxable Income ($) Is: Over But Not over Tax Is Of the Amount over 0 50,000 15% 0 50,000 75,000 7,500 + 25% 50,000 75,000 100,000 13,750 + 34% 75,000 100,000 335,000 22,250 + 39% 100,000 335,000 10,000,000 113,900+34% 335,000 10,000,000 15,000,000 3,400,000+ 35% 10,000,000 15,000,000 18,333,333 5,150,000+38% 15,000,000 18,333,333 35% 0 The equivalent after-tax ROR is determined to be %.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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