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Problem 11-5 Tax Rate (LG11-3) Suppose that LilyMac Photography expects EBIT to be approximately $70,000 per year for the foreseeable future, and that it has
Problem 11-5 Tax Rate (LG11-3) Suppose that LilyMac Photography expects EBIT to be approximately $70,000 per year for the foreseeable future, and that it has 300 10-year, 4 percent annual coupon bonds outstanding. (Use Table 111) What would the appropriate tax rate be for use in the calculation of the debt component of LilyMac's WACC? Tax rate % table 11.1 Corporate Tax Rates Taxable Income Tax Rate $0 $50,000 15% 50,001 75,000 25 75,001 100,000 34 100,001 335,000 39 335,001 10,000,000 34 10,000,001 15,000,000 35 15,000,001 18,333,333 38 18,333,334 + 35 0 3
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