Falcon Networks
Falcon Networks Is a Leading Semiconductor Company with Operations

question 69

Multiple Choice

Falcon Networks
Falcon Networks is a leading semiconductor company with operations in 17 different countries.Information about the company's taxes appears below:
$\begin{array}{l}\begin{array}{lll} \text { Falcon Networks}\\ \text { Components of Income Tax Expense}\\ \text { (in millions) }\\\\ \text { Current - Federal}\\ \text { - Foreign}\\ \text { - State and Local}\\ \text { Total Current}\\ \text { Deferred - Federal}\\ \text { - Foreign}\\ \text { Total Deferred}\\ \text { Total Income Tax Expense}\\ \text { Note: Falcon Networks has no current liability at year-end with }\\ \text { respect to total current taxes.}\\ \text { Components of Income before Taxes}\\ \text { United States}\\ \text { Foreign}\\ \text { Total}\\\end{array}\begin{array}{lll}\\\\\\\mathbf{2 0 1 2} & \mathbf{2 0 11} \\\$ 55.65 & \$ 47.52 \\83.85 & 78.95 \\\underline{14.69} & \underline{12.5} \\\$ 154.19 & \$ 138.97 \\\$ 30.28 & \$ 42.90 \\\underline{23.89} &\underline{14.58}\\\$ 54.17& \$ 57.48 \\\underline{\$ 208.36}& \underline{\$ 196.45} \\\\\\\mathbf{2 0 1 2} & \mathbf{2 0 1 1} \\\$ 256.35 & \$ 253.68 \\\underline{236.85} & \underline{198.85}\\\underline{\$ 493.20}&\underline{\$ 452.53}\end{array}\end{array}$
-Using the information provided by Falcon Networks,determine the federal effective tax rate for 2012.

• A) 33.52%
• B) 35.00%
• C) 42.25%
• D) 45.49%

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Definitions:

Cash Outflows

Money that is spent or transferred out of a business, project, or venture.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production costs.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance.

Incremental Cash Flow

The additional cash flow from taking on a new project, calculated as the difference between the project's cash flows if the project is taken versus if it is not.