CORP FIN FINAL PT A A corporation’s pretax net income of $1,000,000 is taxable b
ID: 1174624 • Letter: C
Question
CORP FIN FINAL PT A
A corporation’s pretax net income of $1,000,000 is taxable based on 10% of the first $300,000, 16% of the next $300,000, and 21% of the balance:
6. What is the corporation’s average tax rate?
7. What is the corporation’s marginal tax rate?
Do the following events INCREASE or DECREASE or have NO EFFECT on net working capital?
8. Inventory is purchased on credit.
9. A $100 account receivable is discounted and sold for $97 cash.
10. The company has an open invoice for $100 but then chooses to take the 2% discount offered and pay $98 if paid within 10 days.
PLEASE SHOW YOUR WORK NO SCREEN SHOTS OR IMAGES OF RESPONSE. PLEASE TYPE YOUR ANSWER OR UPLOAD DOCUMENT IF REQUIREMENTS MENTIONED ABOVE ARE NOT MET I WILL GIVE A NEGATIVE RATING
Explanation / Answer
6 & 7)
Tax Calculation On first $300,000 $ 30,000 =300000*10% On next $300,000 $ 48,000 =300000*16% On next $400,000 $ 84,000 =400000*21% Total tax payable $ 162,000 Average tax rate 16.20% =162000/1000000 Marginal tax rate 21.00% (Last tax slab)