Answer:
The corporation's tax liability is $ 228,820.
Explanation:
To calculate tax liability we first have to find net profit. Detail calculation is given below.
<u><em>Net profit Calculation</em></u>
Sales $ 3,130,000
cost of goods sold and the operating expenses ($ 2,080,000)
Interest expense ( $ 377,000)
Net profit $ 673,000
<u><em>Tax liability Calculation</em></u>
Income fall under Tax bracket of 34% ($75,001 to $10,000,0000 for corporate tax. No additional surtax will be charged as income do not fall under its net.
Tax liabilty = 673,000 * 34% = $ 228,820
In this problem, we need to find the length of an annuity. We already identified the interest rate, the PV, and the payments.
Using the PVA equation: PVA =C({1 – [1/(1 +r)t]} /r
$18,000 = $750{[1 – (1/1.019) t] / 0.019}
Then solve for t:
1/1.019t= 1 − {[($18,000)/($750)](0.019)}
1/1.019t= 0.544
1.019t= 1/(0.544) = 1.838
t= ln 2.193 / ln 1.019 = 32.34 months or 2.7 in years
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