Use the Information for the Question(s) Below

question 10

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 owe 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:

Collected Balance

Collected Balance refers to the amount of funds in a bank account that is available and has been processed completely, distinguishing it from the ledger balance.

Ledger Balance

The total balance of a bank account, calculated at the end of each business day, including all deposits and withdrawals that have been posted to the account.

Lockbox Arrangements

A service provided by banks to process payments quickly by collecting and depositing checks into the company's account on behalf of the company.

Collection of Payments

The process of gathering all monetary amounts owed to an individual or organization by its debtors or customers.