Question
Salinger Software was founded in 2005. The company lost money each of its first three years, but was able to turn a profit in 2008.
Salinger Software was founded in 2005. The company lost money each of its first three years, but was able to turn a profit in 2008. Salinger's operating income (EBIT) for its first four years of operations is reported below.
| Year | EBT |
| 2005 | -$50,000,000 |
| 2006 | -$150,000,000 |
| 2007 | -$100,000,000 |
| 2008 | $700,000,000 |
The company has no debt, so operating income equals earnings before taxes. The corporate tax rate has remained constant at 35%. Assume that the company took full advantage of the carry-back, carry-forward provisions in the Tax Code, and assume that the current provisions were applicable in 2005. How much tax did the company pay in 2008?
| $114,030,875 | ||
| $120,032,500 | ||
| $126,350,000 | ||
| $133,000,000 | ||
| $140,000,000 |
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The Moorad Choudhry Anthology Website Past Present And Future Principles Of Banking And Finance
Authors: Moorad Choudhry
1st Edition
1118779738, 978-1118779736
