13 A firms annual revenues were 1000000 and its expenses wer

13) A firm\'s annual revenues were $1,000,000 and its expenses were $550,000 and it claims $100,000 in depreciation expenses. What does it pay in taxes and what is the after-tax income?

Solution

Assume tax rate to be r% then amount paid in taxes will be

(Revenue-Cost-Depeciation expenses)*(r%)=(1000000-550000-100000)r%=350000*r%

After tax income will be 350000(1-r%)