Ford Motor Company Is Considering Launching a New Line of Hybrid

question 103

Multiple Choice

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 $30 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 with the launch of the new SUV is closest to ________.

• A) $15.0 million
• B) $9.0 million
• C) $33.0 million
• D) $24.0 million