Homework Answers
As the project results in additional taxable income, the marginal tax rate must be applied.
Marginal tax rate is the tax rate for each additional $ of taxable income.
Average tax rate = total tax liability / total taxable income.
Hence, marginal tax rate must be applied.
Additional tax owed = additional taxable income * marginal tax rate
Additional tax owed = $590,000 * 29.93%
Additional tax owed = $176,587
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