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Pear, an individual, plans to start a small business, which will operate as a corporation....

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Accounting

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Pear, an individual, plans to start a small business, which will operate as a corporation. In year 0 , she expects the corporation to generate an ordinary loss of $550,000. Subsequently, she expects the corporation to be profitable, and projects ordinary profit of $825,000 in year 1, and $1,375,000 in year 2. Pear's personal marginal tax rate on ordinary income is 37 Assuming a corporate tax rate of 21% and a 10% discount rate, calculate the present value of expected tax costs on the business earnings for the first 3 years of operations if the business makes an S corporation election. Assume the excess business loss limitation does not apply. Round your discount rate calculations to three decimal places. $653,400 $518,925 $494,200 $291,005

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