Question
1. Based on the corporate tax table below, what is the average tax rate for a firm with $120,000 taxable income? Taxable Income Marginal Tax
1. Based on the corporate tax table below, what is the average tax rate for a firm with $120,000 taxable income? Taxable Income Marginal Tax Rates $0 - 50,000 15% 50,001 - 75,000 25% 75,001 - 100,000 34% 100,001 - 335,000 39% 335,001 - 10,000,000 34% 10,000,001 - 15,000,000 35% 15,000,001 - 18,333,333 38% 18,333,334 + 35%
2. When is it appropriate to include sunk costs in the evaluation of a project?
Include sunk costs if they are considered to be overhead costs
It is never appropriate to include sunk costs
Include sunk costs if they improve the projects NPV
Include sunk costs when they are relatively large
3. A firm has a piece of land that was unused, but plans to build a new office complex on it in a new capital project. The market value of the land should be considered as a component of project cash flows provided that the land:
has been fully depreciated as the market value a sunk cost.
can be depreciated going forward.
has the same market value as the book value.
has identifiable market value as it is an opportunity cost.
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