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A stationery company plans to launch a new type of indelible ink pen. Advertising for the new product will be heavy and will cost
A stationery company plans to launch a new type of indelible ink pen. Advertising for the new product will be heavy and will cost the company $10 million, although the company expects general revenues of $280 million next year from sources other than sales of the new pen. If the company has a corporate tax-rate of 20% on its pretax income, what effect will the advertising for the new pen have on its taxes? OA. It will increase taxes by $10 million. B. It will reduce taxes by $2 million. OC. It will have no effect on taxes. D. It will increase taxes by $2 million.
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