TarHeel Corporation reported pretax book income of $1,038,000. During the current year, the net reserve for warranties increased by $101,900. In addition, tax depreciation exceeded book depreciation by $209,500. Finally, TarHeel subtracted a dividends received deduction of $57,600 in computing its current year taxable income. TarHeel's accounting effective tax rate is:

1. 21%.
2. 19.83%.
3. 18.67%.
4. 17.50%.