Please distinguish your final answer to each part in a clear way (e.g., with highlighter, circled, double-underlined, etc.).

Grading rubric for each problem:

All possible points if final answer correct and you show your work to support the answer.

s possible points if incorrect final answer but you show your work to support incorrect answer.

possible points if you just show correct final answer but no work to support the correct answer.

0 points if you show incorrect answer and have no work shown to support the incorrect answer.

Suppose the tax rate is 21% if taxable income is positive and 0% if taxable income is negative. For each project, calculate the expected pretax payoff, expected average tax rate (expected total taxes divided by expected taxable income), and expected after-tax payoff. This is a modified version of Exercise E7-16 in Ch. 7. Each letter is worth 12 points where there are 4 points for each of the three values to be calculated.

Certain payoff $200,000

50% chance of $200,000 and a 50% chance of $0

50% chance of $600,000 and a 50% chance of a loss of $200,000