Question

Platinum Water Industrial is assessing the hair salon project's financials. In year 1, the project expects revenue of $684,600, variable costs of $321,600, and depreciation of $71,500. Additionally, there's a fixed cost related to an advertising campaign deal with Blue Eagle Marketing, payable either $108,200 if the project proceeds or $154,100 if not. Expected net income for the hair salon project in year 1 is $165,663. What's the anticipated tax rate for year 1? Provide your answer as a decimal."

A) 0.1245
B) 0.2718
C) 0.3897
D) 0.2056

Answer 1

The anticipated tax rate for year 1, we need to find the taxable income by subtracting the depreciation and fixed cost from the net income. Taxable income is calculated as follows: Taxable Income = Net Income - Depreciation - Fixed Cost. The anticipated tax rate for year 1 is 0.

Step-by-step explanation:

To calculate the anticipated tax rate for year 1, we need to find the taxable income by subtracting the depreciation and fixed cost from the net income. Taxable income is calculated as follows: Taxable Income = Net Income - Depreciation - Fixed Cost. In this case, the taxable income would be $165,663 - $71,500 - $108,200 = $-14,037. Since the taxable income is negative, it means the project would not have to pay any taxes. Therefore, the anticipated tax rate for year 1 is 0.

The anticipated tax rate for year 1, we need to find the taxable income by subtracting the depreciation and fixed cost from the net income. Taxable income is calculated as follows: Taxable Income = Net Income - Depreciation - Fixed Cost. The anticipated tax rate for year 1 is 0.