Borsberry Medical has a gross income of $7million for the year. Depreciation and operating expenses total $5 million. The combined state and local tax rate is 7.6%. (a) Use an effective federal rate of 34% to estimate the income taxes. (b) Borsberrys president hopes to have a total of $2 million left after taxes. What reduction in OE is necessary to realize this goal if the effective tax rate and depreciation are constant?

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