Ajax Company pays 15% on the first $50,000 of pre- tax income and 30% on any additional pre- tax income. Ajax Company currently earns $52,000. An investment under consideration is expected to add $20,000 in pre- tax income. is the rate on the additional income.

Question

Quizplus · Accepted Answer

The additional $20,000 in pre-tax income will be taxed at the 30% rate because it exceeds the initial $50,000 threshold.

Ajax Company Pays 15% on the First $50,000 of Pre-