1. Simple Tax questions (3 points) For each question. the tax rate is 35%. Deter
ID: 1095781 • Letter: 1
Question
1. Simple Tax questions (3 points) For each question. the tax rate is 35%. Determine the annual after-tax profit. No present value analysis is required. a) Sam's Mower Repair takes in $70.000 in revenue every year and incurs $30,000 in expenses. b) Betsy's Etsy site purchases $15.000 of yarn one year to make 200 yarn bunnies that sell for $20,000 total. She also incurs $3000 in administrative expenses that year. c) Chen's lunch truck sells 240 General Tso chicken lunches per day, on average. The price is $3. Chen buys $1.20 in food supplies per lunch. Chen operates the lunch truck for 170 days per year. Labor costs are $30.000 per year and truck expenses run $6000 per year.Explanation / Answer
Profit before the Tax = 70,000 -30,000
=$40,000
Tax = 40,000*.35
=14,000
Profit after Tax =40,000 -14,000
=$26,000
Profit before the Tax = 20,000-15,000-3,000
=$2,000
Tax = 2,000*.35
=700
Profit after Tax =2,000-700
=$1,300
Profit before the Tax = 240*3*170 -240*1.20*170-30,000-7,000
=1, 22,400-48,960-30,000-7,000
=36,440
Tax = 36,440*.35
=12,754
Profit after Tax =36,440 -12,754
=$23,686
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