Use the Information for the Question(s)below

question 3

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 30% 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)$13.5 million
• B)$31.5 million
• C)$56.0 million
• D)$24.0 million

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Definitions:

Net Loss

The result when a company's total expenses exceed its total revenues during an accounting period, indicating a decrease in owner's equity.

End-of-period Spreadsheet

A financial document summarizing a company's financial data at the end of an accounting period, including assets, liabilities, and equity.

Income Statement

The income statement is a financial document that shows a company's revenues, expenses, and net income over a specific period.

Statement of Owner's Equity

A financial statement that outlines the changes in the equity of a company or individual over a specific period, detailing contributions, withdrawals, and the overall profit or loss.