Use the Information for the Question(s) Below

question 86

Multiple Choice

Use the information for the question(s) below.
Ford Motor Company is considering launching a new line of hybrid Diesel-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 owes in taxes next year without the launch of the new SUV is closest to:

• A) $24.0 million.
• B) $56.0 million.
• C) $31.5 million.
• D) $13.5 million.

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Definitions:

Farmers

Individuals or entities engaged in the act of agriculture, growing crops and/or raising animals.

Unsecured Debts

Debts that are not backed by an asset or collateral, increasing the risk for lenders if the borrower defaults.

Chapter 7

A chapter of the U.S. Bankruptcy Code that involves the liquidation of a debtor's assets to pay off creditors.

Three-Year Period

A specific duration of time lasting exactly three years.