Your corporate revenue was up this year to an all-time high of $77,000,000. The company purchased a new capital asset costing $11,000,000. The company had total depreciation expenses (including the new asset) of $7,500,000. The cost of revenue (i.e. raw materials & labor) was $46,300,000, and the O&M expenses were an additional $17,000,000. Using the Pre-2018 tax brackets shown below, compute the Pre-2018 corporate income taxes and the current income taxes owed (post 2018 – flat 21% rate) to determine how much the current tax plan saves the company compared to the pre-2018 brackets. Taxable Income (X) $0-$50,000 50,001-75,000 75,001-100,000 100,001-335,000 335,001-10,000,000 10,000,001-15,000,000 15,000,001-18,333,333 18,333,334 and up a. $868,000 b. $806,000 c. $1,302,000 d. $2,108,000 Tax Rate 15% 25% 34% 34% + 5% 34% 35% 35% +3% 35% Tax Computation Formula $0+ 0.15X 7,500+ 0.25(X $50,000) 13,750 + 0.34(X – 75,000) 22,250+ 0.39(X - 100,000) 113,900 + 0.34(X - 335,000) 3,400,000+ 0.35(X - 10,000,000) 5,150,000+ 0.38(X - 15,000,000) 6,416,666 + 0.35(X – 18,333,333)
Your corporate revenue was up this year to an all-time high of $77,000,000. The company purchased a new capital asset costing $11,000,000. The company had total depreciation expenses (including the new asset) of $7,500,000. The cost of revenue (i.e. raw materials & labor) was $46,300,000, and the O&M expenses were an additional $17,000,000. Using the Pre-2018 tax brackets shown below, compute the Pre-2018 corporate income taxes and the current income taxes owed (post 2018 – flat 21% rate) to determine how much the current tax plan saves the company compared to the pre-2018 brackets. Taxable Income (X) $0-$50,000 50,001-75,000 75,001-100,000 100,001-335,000 335,001-10,000,000 10,000,001-15,000,000 15,000,001-18,333,333 18,333,334 and up a. $868,000 b. $806,000 c. $1,302,000 d. $2,108,000 Tax Rate 15% 25% 34% 34% + 5% 34% 35% 35% +3% 35% Tax Computation Formula $0+ 0.15X 7,500+ 0.25(X $50,000) 13,750 + 0.34(X – 75,000) 22,250+ 0.39(X - 100,000) 113,900 + 0.34(X - 335,000) 3,400,000+ 0.35(X - 10,000,000) 5,150,000+ 0.38(X - 15,000,000) 6,416,666 + 0.35(X – 18,333,333)
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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Transcribed Image Text:Your corporate revenue was up this year to an all-time high of $77,000,000. The company
purchased a new capital asset costing $11,000,000. The company had total depreciation
expenses (including the new asset) of $7,500,000. The cost of revenue (i.e. raw materials &
labor) was $46,300,000, and the O&M expenses were an additional $17,000,000. Using the
Pre-2018 tax brackets shown below, compute the Pre-2018 corporate income taxes and
the current income taxes owed (post 2018 - flat 21% rate) to determine how much the
current tax plan saves the company compared to the pre-2018 brackets.
Taxable Income (X)
$0-$50,000
50,001-75,000
75,001-100,000
100,001-335,000
335,001-10,000,000
10,000,001-15,000,000
15,000,001-18,333,333
18,333,334 and up
a. $868,000
b. $806,000
c. $1,302,000
d. $2,108,000
Tax Rate
15%
25%
34%
34% + 5%
34%
35%
35% + 3%
35%
Tax Computation Formula
$0 + 0.15X
7,500+ 0.25(X - $50,000)
13,750 + 0.34(X - 75,000)
22,250 + 0.39(X 100,000)
113,900 +0.34(X - 335,000)
3,400,000+ 0.35(X - 10,000,000)
5,150,000+ 0.38(X - 15,000,000)
6,416,666 + 0.35(X 18,333,333)
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