Calculate the corporation total accounting profits

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Reference no: EM131317956

A corporation has $7 million in equity. During 2015, it had $4 million in receipts and $2 million in capital gains from the sale of a subsidiary. It incurred labor costs of $1 million, interest costs of $250,000, material costs of $500,000, and paid rent for structures of $250,000. The corporate tax rate that applies to this firm is a flat 34%.

a. Calculate the corporation’s total accounting profits.

b. Assuming that the corporation’s profits are fully taxable, calculate its tax liability.

Reference no: EM131317956

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