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    Computing the Actual, Average, and Marginal Tax Rates

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    Joe's Fly-By-Night Oil Company earned $200,000 last year before-taxes.

    a. Calculate how much Joe's owes in income taxes for the year (use the table on page 27 in your textbook).

    b. What was Joe's average tax rate?

    c. What was Joe's marginal tax rate?

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    Solution Preview

    a. Joe's will owe $22,250+(($200,000-$100,000)*.39), or $61,250.

    b. The average tax rate is the total ...

    Solution Summary

    This solution illustrates the computation of the actual, average, and marginal corporate income tax rates.