Company P must choose between two alternate transactions. The cash generated by Transaction $1$ is taxable, and the cash generated by Transaction $2$ is nontaxable.

Required:

Determine the marginal tax rate at which the after$-$tax cash flows from the two transactions are equal assuming that Transaction $1$ generates $$191,000$ of income and Transaction $2$ generates $$164,260$ of income.

Determine the marginal tax rate at which the after$-$tax cash flows from the two transactions are equal assuming that Transaction $1$ generates $$201,000$ of income and Transaction $2$ generates $$128,640$ of income.