Question

Reed Corporation reports 2017 sales of $415 million, income before income taxes of $122.3 million and tax expense of $35.9 million.
If sales are projected to increase by 4% next year, projected tax expense for 2018 will be:


A. $35.9 million


B. $37.3 million


C. $40.8 million


D. $42.3 million


E. There is not enough information to determine the amount.

Answer 1

B. $37.3 million

35.9 million × 4% = 1.436 million

= 35.9 + 1.436

= $37.336 million or $37.3 million