Ask Question
11 June, 20:40

Hemingway Corporation is considering expanding its operations to boost its income, but before making a final decision, it has asked you to calculate the corporate tax consequences of such a decision. Currently, Hemingway generates before-tax yearly income of $197 comma 000 and has no debt outstanding. Expanding operations would allow Hemingway to increase before-tax yearly income to $339 comma 000. Hemingway can use either cash reserves or debt to finance its expansion. If Hemingway uses debt, it will have a yearly interest expense of $69 comma 000. Create a spreadsheet to conduct a tax analysis (assume a 23 % flat tax rate) for Hemingway Corporation and determine the following: a. What is Hemingway's current annual corporate tax liability

+1
Answers (1)
  1. 11 June, 22:29
    0
    Answer: $45,310

    Explanation:

    Given that,

    Before-tax yearly income = $197,000

    Hemingway to increase before-tax yearly income to $339,000

    Yearly interest expense = $69,000

    flat tax rate = 23%

    Current annual corporate tax liability = $197,000 * 23%

    = $197,000 * 0.23

    = $45,310
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Hemingway Corporation is considering expanding its operations to boost its income, but before making a final decision, it has asked you to ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers