Domino Company uses the percent of receivables method to estimate uncollectible accounts expense. Domino began 2016 with balance
1 answer:
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Answer:
Option B, 3/4 is correct answer.
Explanation:
Given an increase in government spending = $15 billion.
The increase in total demand for goods and services = $60 billion.
Firs calculate the expenditure multiplier by dividing the increase in demand for goods and services with an increase in government spending.
Expenditure multiplier = 60 / 15 = 4
Now find the MPC with the help of expenditure multiplier.
Thus, option B is correct.
Now solve for the second case, the allow for crowding out.
If there is crowding out that means multiplier will be higher than initial multiplier.
Thus, the new MPC will be greater than the previous one.
Answer:
Income Tax liability is $64,575
After Tax Income is $245,425
Marginal Tax Rate : 21%
Average Tax Rate: 18.72% approx
Explanation:
Income Tax liability is computed on the net income. Net Income is arrived at by deducting interest expenses and dividends paid and adding up taxable dividend received to taxable operating income.
Therefore, Net Income = Operating Income - interest charges - dividends paid + 50% of dividends received.
Net Income = $345,000 - 30,000 - 10,000 + 2500
Net Income = $ 307,500
Tax Liability = $307,500 × 21% = $64,575
After tax income = Net Income - Tax liability + Dividend exempt from tax
After Tax Income = $307,500 - 64,575 + 2500 = 2,45,425
Marginal Tax Rate is defined as the percentage of tax rate applied to one's income for each tax bracket in which one qualifies.
Marginal Tax Rate =
Marginal Tax Rate =
Marginal Tax Rate = 21%
Average Tax Rate =
Average Tax Rate =
Average Tax Rate = 18.72% approx.