Problem 1: A married couple earned $115,000 (in taxable income) in 2014. Use table
Taxable Income (dollars)
|
Single Taxpayers
|
Married Taxpayer Filling Joint Returns
|
Tax Rates, %
|
|
0-9,075
|
0-18,150
|
10
|
|
9,076-36,900
|
18,151-73,800
|
15
|
|
36,901-89350
|
73,801-148,350
|
25
|
|
89351-186,350
|
148,351-226,850
|
28
|
|
186,351-405,100
|
226851-405,100
|
33
|
|
405,101-406,705
|
405,101-457,600
|
35
|
|
406,751 and above
|
457,601 and above
|
39.6
|
How much did they pay taxes?
a. What was their marginal tax bracket?
b. What was their average tax bracket?
Problem 2: Butterfly Tractors had $23.50 million in last year. Cost of goods sold was $9.90 million, depreciation expense was $3.90 million, interest payment on outstanding debt was $2.90 million, and the firm's tax rate was 30%.
a. What were the firm's net income and net cash flow?
b. What would happen to net income and cash flow if depreciation were increased by $2.90 million?