1.

Before considering a tax loss carryforward of $80 million, Aero Corporation reported $200 million of pretax accounting and taxable income in the current year. The income tax rate for all previous years was 40%. On January 1 of the current year a new tax law was enacted, reducing the rate to 35% effective immediately. Aero's income tax payable for the current year would be:

Select one:

a.

$48 million.

b.

$28 million.

c.

$36 million.

d.

$42 million.

e.

$80 million