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1 January, 19:02

LO 3.2A company has pre-tax or operating income of $120,000. If the tax rate is 40%, what is the company’s after-tax income?

$300,000

$240,000

$48,000

$72,000

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Answers (1)
  1. 1 January, 19:15
    0
    The company's after-tax income is $72,000

    Explanation:

    The company's after-tax income is calculated by using the following formula:

    Company's after-tax income = Company's pre-tax income - Income Tax

    In there:

    The company has pre-tax income of $120,000

    Income tax = Company's pre-tax income x Tax rate = $120,000 x 40% = $48,000

    Company's after-tax income = $120,000 - $48,000 = $72,000
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Home » Business » LO 3.2A company has pre-tax or operating income of $120,000. If the tax rate is 40%, what is the company’s after-tax income? $300,000 $240,000 $48,000 $72,000
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