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i Saved Help Save & Exit Submit At the end of 2021, your company recorded taxable income of $6,022. Tax rate this year was 25%.
i Saved Help Save & Exit Submit At the end of 2021, your company recorded taxable income of $6,022. Tax rate this year was 25%. You are facing uncertainty regarding future income and tax rates and would like to prepare a scenario analysis. You narrowed down the possibilities for next year to the following: * Taxable income: 4 scenarios - a. Decrease of 20%, b. No change, c. Increase of 10%, d. Increase of 15%. * Tax rate: 2 scenarios - a. 20%, b. 35% - 5) Assume that the unconditional probabilities for each of the different income scenarios is the same (25% each). What is the probability associated with tax rate 35% that will bring your net income next year to the same net income as this year? (probability of each of the 8 scenarios is the product of the probability of a tax scenario and the probability of the income scenario - for example if the probability of tax rate decrease is 50% then the probability of the first cell in the above table will be 0.5*0.25=0.125) (enter your answer as a number between 0 and 1 rounded to the third decimal point - for example 43.669% should be entered as 0.437)
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