If Home Depot has before-tax earnings of $7,000,000,Pays $2,400,000 in taxes,has no preferred stock,and a beta of 1.20,what is the firm's current average tax rate?

Question

Quizplus · Accepted Answer

The average tax rate can be calculated using the formula:

Average tax rate = Total taxes paid / Before-tax earnings

Substituting the given values,

Average tax rate = $2,400,000 / $7,000,000 = 0.3429 or 34.29%

Therefore, the correct answer is B) 34.29%.

If Home Depot Has Before-Tax Earnings of $7,000,000,Pays $2,400,000 in Taxes,has