A Company Had Taxable Income of $12 Million in Fiscal

question 39

Multiple Choice

A company had taxable income of $12 million in fiscal 2019 and paid taxes of 4.8 million; the company incurred a loss of $7 million in fiscal 2020 when the tax rate is 50%. How much refund is the company entitled to?

• A)Nil
• B)$2.8 million
• C)$3.5 million
• D)$4.8 million

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Definitions:

Internal Rate

An internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.

Independent Project

A project undertaken by an entity or individual that operates independently of other concurrent initiatives, not impacting or influenced by them.

Profitability Index

A financial metric used to determine the desirability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Crossover Rate

The rate at which two projects have the same net present value, used in capital budgeting to compare projects.