The marginal tax rate of a firm is displayed as below: Taxable Income -- Tax...
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Accounting
The marginal tax rate of a firm is displayed as below:
Taxable Income -- Tax rate
$0 - $5 -- 10%
$5 - $10 --20%
$10 - --30%
A firm has its taxable income as the following:
Probability ---Pre-tax income
0.4--- $10m
0.6--- $30m
(1) Assume the company could purchase a zero-loading insurance policy. How much tax saving by purchasing the insurance policy? (2) What if the insurance policy has a 30% loading?
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