Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 1, Problem 1.7P
a)
Summary Introduction
To determine: The after-tax earnings, tax liability, and average tax rates.
Introduction:
Tax liability is an amount owed to a tax authority by the company.
b)
Summary Introduction
To plot: The average tax rate.
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Marginal tax rates Using the tax rate schedule given here, perform the following:
a. Find the marginal tax rate for the following levels of sole proprietorship earnings before taxes: $14,700; $59,500;
$89,600; $156,000; $247,000; $456,600; and $1 million.
b. Plot the marginal tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis).
Chapter 1 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 1.1 - What is the goal of the firm and, therefore, of...Ch. 1.1 - For what three main reasons is profit maximization...Ch. 1.1 - What is risk? Why must financial managers consider...Ch. 1.1 - Is maximizing shareholder wealth inconsistent with...Ch. 1.2 - What are the main types of decisions that...Ch. 1.2 - Prob. 1.6RQCh. 1.2 - Prob. 1.7RQCh. 1.2 - What are the major differences between accounting...Ch. 1.2 - Prob. 1.9RQCh. 1.3 - Prob. 1.10RQ
Ch. 1.3 - Prob. 1.11RQCh. 1.3 - What does it mean to say that corporations face a...Ch. 1.3 - Prob. 1.13RQCh. 1.3 - Prob. 1.14RQCh. 1.3 - Prob. 1.15RQCh. 1 - Learning Goal 4 ST1-1 Emphasis on Cash Flows...Ch. 1 - Prob. 1.1WUECh. 1 - Prob. 1.2WUECh. 1 - Learning Goal 4 E1-3 The end-of-year parties at...Ch. 1 - You have been made treasurer for a day at AIMCO,...Ch. 1 - Recently, some branches of Donut Shop, Inc., have...Ch. 1 - Ross Company, a manufacturer of pharmaceuticals,...Ch. 1 - Prob. 1.1PCh. 1 - Prob. 1.2PCh. 1 - Cash flows It is typical for Jane to plan,...Ch. 1 - Marginal cost-benefit analysis and the goal of the...Ch. 1 - Identifying agency problems, costs, and...Ch. 1 - Corporate taxes Tantor Supply, Inc., is a small...Ch. 1 - Prob. 1.7PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.9PCh. 1 - Interest versus dividend expense Michaels...Ch. 1 - Hemingway Corporation is considering expanding its...Ch. 1 - Prob. 1.12PCh. 1 - Prob. 1SE
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- Marginal tax rates Using the tax rate schedule attached Perform the following: a. Find the marginal tax rate for the following levels of sole proprietorship earnings before taxes: $16,800; $59,500; $89,600; $151,000; $245,000; $451,200; $1,000,000 b. Plot the marginal tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis).arrow_forwardUsing the tax rate schedule given here LOADING..., perform the following: a. Find the marginal tax rate for the following levels of sole proprietorship earnings before taxes: $ 15 000; $ 60 000; $ 90 000; $ 150 000; $ 250 000; $ 450 000; and $1 million. b. Plot the marginal tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis) $0 to $9,875 $0 (10% amount over $0) 9,876 to 40, 125 988 + (12% amount over 9, 876) 40, 126 to 85, 525 4,618 + (22% amount over 40, 126) 85,526 to 163, 300 14, 606 + (24% amount over 85, 526) 163, 301 to 207, 350 33, 272 + (32% amount over 163, 301) 207, 351 to 518, 400 47,368 (35% amount over 207, 351) 518,401 to Unlimited 156, 235 (37% amount over 518, 401)arrow_forwardNeed help to learn how to calculate the tax liability, after-tax earnings, and average tax rates for the following levels of corporate earnings before taxes: $7,700; $81,100; $304,000; $499,000;$1.9 million; $9.8 million; and $19.8 million. b. Plot the average tax rates (measured on the y axis) against the pretax income levels (measured on the x axis). What generalization can be made concerning the relationship between these variables? Attached is the chartarrow_forward
- Required Answer each of the following questions by providing supporting computations. 1. Assume that the company’s income tax rate is 30% for all items. Identify the tax effects and after-tax amounts of the three items labeled pretax. 2. Compute the amount of income from continuing operations before income taxes. What is the amount of the income tax expense? What is the amount of income from continuing operations? 3. What is the total amount of after-tax income (loss) associated with the discontinued segment? 4. What is the amount of net income for the year?arrow_forwardUsing the individual tax rate schedule perform the following: a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $13,100; $77,200; $324,000; $499,000; $1.2 million; $1.6 million; and $2.3 million. b. Plot the average tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis). What generalization can be made concerning the relationship between these variables? ACCERarrow_forwardUsing the individual tax rate schedule, perform the following: a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $14,900; $75,700; $304,000; $492,000; $1.1 million; $1.5 million; and $2.3 million. b. Plot the average tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis). What generalization can be made concerning the relationship between these variables? a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $14,900; $75,700; $304,000; $492,000; $1.1 million; $1.5 million; and $2.3 million. (Round dollars to the nearest cent and round percentages to one decimal place.) Before-Tax Earnings $14,900 Tax Liability $ Data table ---- Tax Rates 10.0% 12.0% 22.0% 24.0% 32.0% 35.0% 37.0% C (...) Taxable Income $0 to $9,875 $9,876 to $40,125 $40,126 to $85,525 $85,526 to $163,300 $163,301 to…arrow_forward
- Using the individual tax rate schedule, perform the following: a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $11,600; $78,900; $308,000; $499,000; $1.2 million; $1.7 million; and $2.1 million. b. Plot the average tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis). What generalization can be made concerning the relationship between these variables? a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $11,600; $78,900; $308,000; $499,000; $1.2 million; $1.7 million; and $2.1 million. (Round dollars to the nearest cent and round percentages to one decimal place.) Before-Tax Earnings $11,600 Data table (Click the icon here in order to copy the contents of the data table below into a spreadsheet.) TABLE 1.2: Federal Income Tax Rates and Brackets for Individual Returns (2018)…arrow_forward2. Using the following Income Tax data, and given that your annual income is $ 85,000: a) Calculate the total tax (in $); b) The average tax rate (%); c) The marginal tax rate (%); and d) What is the classification of this taxation system? Income ($) Tax Rate (%) 0- 60 000 60 001 - 70 000 10 70 001 - 100 000 15 Over 100 000 17arrow_forwardcalculate net income after the cooperate income tax is paid for quarter 2 from the following income statement.arrow_forward
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