Marginal versus Average Tax Rates (Refer to Table 2.3.) Corporation Growth has $86,000 in taxable income, and

Question:

Marginal versus Average Tax Rates (Refer to Table 2.3.) Corporation Growth has $86,000 in taxable income, and Corporation Income has $8,600,000 in taxable income.

a. What is the tax bill for each firm?

b. Suppose both firms have identified a new project that will increase taxable income by $10,000. How much in additional taxes will each firm pay? Why is this amount the same?

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