Apple Company pays 15% on the first $50,000 of pretax income and 30% on any addi

Question

Apple Company pays 15% on the first $50,000 of pretax income and 30% on any additional pretax income. Apple Company currently earns $52,000. An investment under consideration is expected to add $20,000 in pretax income. What is the tax rate on the additional income from the investment? SHOW WORK

Apple Company pays 15% on the first $50,000 of pretax income and 30% on any additional pretax income. Apple Company currently earns $52,000. An investment under consideration is expected to add $20,000 in pretax income. What is the tax rate on the additional income from the investment? SHOW WORK

Explanation / Answer

Total Income = $52,000 + 20,000 = $72,000
on First $50,000 tax rate = 15%

$72,000 - $50000 = $22,000 tax rate 30%

Tax rate on the additional income from the investment = 30% because it exceeds the minimum 50,000 bracket.

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