Salinger Software was founded in 2012. The company lost money each of its first three years, but was able to turn a profit in 2015. Salinger's operating income (EBIT) for its first four years of operations is reported below. Year EBIT 2012 -$50,000,000 2013 -$150,000,000 2014 -$100,000,000 2015 $700,000,000
Salinger Software was founded in 2012. The company lost money each of its first three years, but was able to turn a profit in 2015. Salinger's operating income (EBIT) for its first four years of operations is reported below. Year EBIT 2012 -$50,000,000 2013 -$150,000,000 2014 -$100,000,000 2015 $700,000,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Salinger Software was founded in 2012. The company lost money each of its first three years, but was able to turn a profit in 2015. Salinger's operating income (EBIT) for its first four years of operations is reported below.
| Year | EBIT |
| 2012 | -$50,000,000 |
| 2013 | -$150,000,000 |
| 2014 | -$100,000,000 |
| 2015 | $700,000,000 |
The company has no debt, so operating income equals earnings before taxes. The corporate tax rate has remained constant at 35%. Assume that the company took full advantage of the carry-back, carry-forward provisions in the Tax Code, and assume that the current provisions were applicable in 2012. How much tax did the company pay in 2015?
Select one:
a.
$147,000,000
b.
$165,200,000
c.
$158,200,000
d.
$140,000,000
e.
$107,800,000
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