Question

fest information Description This assignment is out of 20 points. Instructions You MAY work on this assignment in small groups. However, all students must submit their own assignment by the due date. You may begin this assignment and complete it at a later date. It does not need to be completed in one sitting and there is no time limit. There is no limit on the number of attempts. Your highest score will be recorded Multiple Attempts This test allows multiple attempts Force Completion This test can be saved and resumed later Question Completion Status Moving to another question will save this response. Question 3 of 9 Question 3 2 points (Extra Credit) Save Answer The Toyota Motor Corporation 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 $30 million next year. Without the new SUV, Toyota expects to earn pre-tax income of $80 milion from operations next year. Toyota pays a 30% tax rate on its pre-tax income. If Toyota decides to launch the new SUV, the amount it owes in taxes next year will Decrease by $30 million a. Increase by $9 million b. Increase by $15 million Od Increase by $33 million Oe. Decrease by $9 million 14 888 * dalehe &

Answer 1

e. decrease by $9 million

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

E24 Without New SUV Pre-tax income Taxes (30%) $80,000,000 $24,000,000 11 12 13 With New SUV Operating losses from new SUV Total Pre-tax Income Taxes (30%) $30,000,000 $50,000,000 $15,000,000 Taxes will Decrease by $9,000,000

Cell reference -

в Without New SUV Pre-tax income Taxes (30%) 80000000 =C7*0.3 With New SUV Operating losses from new SUV Total Pre-tax Income Taxes (30%) 30000000 =C7-C11 =C12*0.3 Taxes will Decrease by =C8-C13

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.