Explain your answers to the following questions thoroughly

You may use the following simplified corporate tax bracket

You may use the following simplified corporate tax bracket

Question
3
. You may use the following simplified corporate tax bracket to answer the following question:

You’re the Chief Operating Officer for Space X, and your current taxable corporate income is $24,000
.

You can undertake a project that will increase your taxable corporate income by $1,500
. The project

costs $500
. Explain your answers to the following questions thoroughly and be sure to address how the

Range Tax

$0 – $5,000 10% of the amount over $0

$5,000 – $20,000 $500 + 20% of the amount over $5,000

$20,000 – $25,000 $3,500 + 40% of the amount over $20,000

$25,000 and over 30% of the amount over $0

given tax code affects your choices
.

a
. Do you undertake this project if you are able to finance the project without raising funds?

b
. Now suppose that you need to raise the $500 through either debt or equity financing, and the

interest rate is 10%
. Interest paid on loans is deductible, and you can claim a credit for dividend

payments
. Do you undertake the project? How do you finance it? Why?

You may use the following simplified corporate tax bracket

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