Homework Questions Chapter 2 Isaiah Flores-Aguirre.pdf -...

This preview shows page 1 - 2 out of 3 pages.

Isaiah Flores-Aguirre 2/18/2021 FIN 3220 Chapter 2 Homework; 5-7, 10-12, 14 5. Duela Dent is single and had $189,000 in taxable income. Using the rates from Table 2.3 in the chapter, calculate her income taxes. Answer: Using Table 2.3, we can see the marginal tax schedule. The first $9,525 of income is taxed at 10 percent, the next $38,700 is taxed at 12 percent, the next $82,500 is taxed at 22 percent, the next $58,275 is taxed at 24 percent, so the taxes will be Taxes = .10($9,525) + .12($38,700) + .22($82,500) + .24($189,000-130,725) Taxes = 952.5 + 4644 + 18150 + 13986= 37,732.5 6. In Problem 5, what is the average tax rate? What is the marginal tax rate? Answer: Average Tax Rate= 37,732.5/189,000 = 0.1996 = 19.96% Marginal Tax Rate: 24% 7. Benson, Inc., has sales of $38,530, costs of $12,750, depreciation expense of $2,550, and interest expense of $1,850. If the tax rate is 21 percent, what is the operating cash flow, or OCF? Answer: OCF = EBIT + Depreciation - Taxes OCF = $23,230 + 2,550 - 4,490 OCF = $21,290 10. The December 31, 2018, balance sheet of Whelan, Inc., showed long-term debt of $1,350,000, and the December 31, 2019, balance sheet showed long-term debt of $1,470,000.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture