How much does the item cost before tax on these financial accounting question? The tax savings from an expense item are$75,000 for a company that spends 25%of its income to taxes. How much doesthe item cost before tax?a. $250,000b. $ 200,000c. $150,000d. $300,000

Step 1: Define Tax SavingsThe amount by which tax liability for an individual or entity is reduced…

Answered: The tax savings from an expense item…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 7P

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You have calculated the adjusted profit for the company to be $2,000,000. The tax rate is 25%. Estimated tax paid during the year is $750,000. Employment Tax Credit available (which is non-refundable) is $700,000. The tax refundable for this company is. a.$950,000 b.$200,000 c.$500,000 d.$250,000
Ans
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The tax savings from an expense item are $75,000 for a company that spends 25% of its income to taxes. How much does the item cost before tax? a. $250,000 b. $ 200,000 c. $150,000 d. $300,000