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. The marginal tax rate of ABC Corp is specified as below: Taxable IncomeTax rate$ 0 - $ 5 1 0 % $ 5 -

. The marginal tax rate of ABC Corp is specified as below: Taxable IncomeTax rate$0- $510%$5- $1020%$10-30%A firm has its taxable income as the following:Probability Pre-tax income 0.1 $20m 0.9 $50m(1) Assume the company could purchase a zero-loading insurance policy. What is the premium of the insurance policy? (2) Continue to assume the policy to have a zero loading. How much tax saving will ABC Corp have by purchasing the insurance policy? (3) Answer (1) and (2) assuming the insurance policy has a 25% loading.

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