Suppose that corporations are subject to a statutory tax rate of 28 %. Also, suppose...
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Accounting
Suppose that corporations are subject to a statutory tax rate of 28 %. Also, suppose that the present value of the depreciation allowances as a fraction of the purchase price of new investment goods is 0.5. Finally, suppose that companies can apply investment tax credit of 0.1 per $1 invested in new investment goods.
What is the effective corporate tax rate that the company faces?
Select one:
a. 12.25%
b. 9.52%
c. None of the other answers is true
d. 5.26%
e. 7.60%
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