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    Expected Tax Payable for a Project

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    Suppose the tax rate is 30% if taxable income Is positive and 0%, if taxable income is negative, Calculate the expected tax payable for the following four projects. Note that for each project the expected taxable income is $50,000. For each project, also calculate the expected average tax rate (expected total taxes divided by expected taxable income). Explain and discuss your result.

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    Project Income Possibility Loss Possibility Expected Income Tax Expected ...

    Solution Summary

    This posting shows how to use both calculation and graph to figure out the expected tax payable under different scenario where expected taxable income is the same but different combination of taxable income and its possibilities.