Lincoln Corporation provides an incentive compensation plan under which its president is to receive a bonus equal to 15 percent of Lincoln's income in excess of $150,000 before deducting income tax but after deducting bonus.If income before income tax and bonus is $320,000 and the effective tax rate is 40 percent,the amount of the bonus should be

Question

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To find the bonus, let B be the bonus. The equation is: B = 0.15 * ($320,000 - $150,000 - B). Solving for B gives B = $22,174.

Lincoln Corporation Provides an Incentive Compensation Plan Under Which Its