Knorr & Associates paid total taxes of $72,000 in the first year of their consulting business. (a) What was the company’s taxable income? (b) What was the average tax rate? (c) What was the estimated NOPAT for the year?

What will be an ideal response?


(a) From Table 17.1, TI is in the range of $100,000 to $335,000

72,000 = 22,250 + 0.39(TI – 100,000)
0.39TI = 88,750
TI = $227,564

(b) Average tax rate = T = 72,000/227,564 = 0.316 (31.6%)

(c) NOPAT = TI(1 – T)
= 227,564(1 – 0.316)
= $155,654

Trades & Technology

You might also like to view...

Solid-state reduced-voltage controllers provide smooth, stepless acceleration of a motor through the use of silicon-controlled _____________________.

Fill in the blank(s) with the appropriate word(s).

Trades & Technology

Regarding field-fabricated, kit-form reusable insulation covers, which of the following statements is true?

a. There is only one manufacturer of effective reusable insulation cover kits. b. They are suitable for both above- and below-ambient service. c. They are suitable only for temporary insulation until permanent insulation can be installed. d. Some reusable insulation cover kits are suitable as primary insulation

Trades & Technology

The primary diplomatic result of Roosevelt's diplomatic ending of the Russo-Japanese War was that

A. the United States began to ally itself with Russia against Japan. B. both Japan and Russia became increasingly hostile to the United States. C. U.S. relations with Japan improved. D. U.S. relations with Russia improved. E. China began to seek an alliance with the United States in order to check Japan and Russia.

Trades & Technology

Which of the following expenses would you consider as indirect?

A) The cost of the health insurance cost for the technicians only. B) The wages you pay the service cashier. C) Technician's wages for working on a repair order. D) None of the above

Trades & Technology