Ford Motor Company is considering launching a new line of hybrid diesel-electric

Question

Ford Motor Company is considering launching a new line of hybrid diesel-electric SUVs. The heavy advertising expenses associated with the new SUV launch would generate operating losses of $35 million next year. Without the new SUV, Ford expects to earn pretax income of $80 million from operations next year. Ford pays a 30% tax rate on its pretax income. The amount that Ford Motor Company owes in taxes next year with the launch of the new SUV is closest to: OA. B. ° C. D. $24.0 million $10.5 million $34.5 million

Explanation / Answer

A. $24 million

The amount that Ford Motor Company owe in taxes next year without the launch of the new SUV is closest to:

= $80 × 0.30

= $24 million

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