Hemingway Corporation is considering expanding its operations to boost its? income, but before making a final? decision, it has asked you to calculate the corporate tax consequences of such a decision.? Currently, Hemingway generates? before-tax yearly income of

?$196,000

and has no debt outstanding. Expanding operations would allow Hemingway to increase? before-tax yearly income to

?$343,000

Hemingway can use either cash reserves or debt to finance its expansion. If Hemingway uses? debt, it will have a yearly interest expense of

?$68,000

Create a spreadsheet to conduct a tax analysis for Hemingway Corporation and determine the? folowing:

a. What is? Hemingway's current annual corporate tax? liability?

b. What is? Hemingway's current average tax? rate?

c. If Hemingway finances its expansion using cash? reserves, what will be its new corporate tax liability and average tax? rate?

d. If Hemingway finances its expansion using? debt, what will be its new corporate tax liability and average tax? rate?

e. What would you recommend the firm? do? Why?