Use the Information for the Question(s)below

question 8

Multiple Choice

Use the information for the question(s) below.
Ford Motor Company is considering launching a new line of Plug-in Electric SUVs.The heavy advertising expenses associated with the new SUV launch would generate operating losses of $35 million next year.Without the new SUV,Ford expects to earn pre-tax income of $80 million from operations next year.Ford pays a 21% tax rate on its pre-tax income.
-The amount that Ford Motor Company will owe in taxes next year with the launch of the new SUV is closest to:

• A)$9.45 million.
• B)$31.5 million.
• C)$56.0 million.
• D)$24.0 million.

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Definitions:

Maturity

The date on which the principal or final payment is due on a loan or security.

Social Security Tax

A mandatory contribution imposed by governments to fund public programs that provide retirement benefits, disability income, and other social security services.

Medicare Tax

A federal tax deducted from employees' wages and employers' pay to fund the Medicare program.

Unemployment Compensation

Payments made by the government or a fund to unemployed workers who meet certain eligibility requirements.