Marginal and average tax rates. MoCo, Inc., operates in a state where companies face a tax rate of 9 percent on taxable income up to $1,000,000 and 10.5 percent on taxable income above $1,000,000.

Assume the federal tax rate is a flat 21 percent and MoCo, Inc., will have taxable income of $1,500,000 for the year. What is the firm’s average blended federal and state tax rate? What is the firm’s marginal blended federal and state tax rate? If MoCo, Inc., is evaluating a new investment, what tax rate should it use for NPV calculations?