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 million next year. Without the new SUV, Ford expects to earn pre-tax income of $80 million from operations next year. Ford pays a 35% tax rate on its pre-tax income. The amount that Ford Motor Company owes in taxes next year without the launch of the new SUV is closest to ________.
A) $28.0 million
B) 12.3 million
C) $40.3 million
D) $15.8 million

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  million next year. Without the new SUV, Ford expects to earn pre-tax income of $80 million from operations next year. Ford pays a 35% tax rate on its pre-tax income. The amount that Ford Motor Company owes in taxes next year without the launch of the new SUV is closest to ________.
A) $28.0 million 
B) 12.3 million 
C) $40.3 million 
D) $15.8 million

Quizplus · Accepted Answer

A) $80 × 0.35 = $28.0 million

Ford Motor Company Is Considering Launching a New Line of Hybrid