Question
1. Murugan Inc was founded in 2015. The company lost money each of its first three years but was able to turn a profit in
1. Murugan Inc was founded in 2015. The company lost money each of its first three years but was able to turn a profit in 2018. Murugans operating income (EBIT) for its first four years of operations is reported below. Year EBIT 2015 $ 50,000,000 2016 $150,000,000 2017 $100,000,000 2018 $700,000,000 The company has no debt, so operating income equals earnings before taxes. The corporate tax rate has remained constant at 30%. Assume that the company took full advantage of the carry-back, carry-forward provisions in the Tax Code, and assume that the current provisions were applicable in 2015. How much tax did the company pay in 2018?
$240,000
$280,000
$87,500
$75,000
$105,000
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