first we calculate the tax amount. then using that tax amount we can calculate the tax rate in Year 1.
net income = revenue - costs - depreciation - interest payment - tax amount
we can rearrange the above equation as below:
tax amount = revenue - costs - depreciation - interest payment - net income
tax amount = $119,000 - $40,000 - $13,000 - $9,000 - $37,409 = $19,591
tax rate expected to be in year 1 = tax amount/income before tax
income before tax = revenue - costs - depreciation - interest payment = $119,000 - $40,000 - $13,000 - $9,000 = $57,000
tax rate expected to be in year 1 = $19,591/$57,000 = 0.3437 or 34.37%
the tax rate expected to be in year 1 is 0.3437.
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