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:

Annuity

An investment vehicle that offers a steady flow of income to an individual, commonly utilized in retirement planning strategies.

Interest Rate

This is the percentage of a loan or deposit amount charged as interest to the borrower or paid to the investor, respectively, typically expressed on an annual basis.

Equivalent

Equivalent refers to something being equal in value, function, or meaning, often used in financial contexts to compare different financial instruments or investments.

Cash Flows

The entirety of funds transferred inwards and outwards of a business, which is vital for maintaining operational liquidity.