Transcribed Image Text: 1. Salinger Software was founded in 2015. The company lost money each of its first three years, but was able to turn a profit in 2018. Salinger’s

Transcribed Image Text: 1. Salinger Software was founded in 2015. The company lost money each of its first three
years, but was able to turn a profit in 2018. Salinger’s operating income (EBIT) for its first four
years of operations is reported below.
Year EBIT
2015 -$100,000,000
2016 -$150,000,000
2017 -$100,000,000
2018 $700,000,000
The company has no debt, so operating income equals earnings before taxes. The corporate
tax rate has remained constant at 35%. Assume that the company took full advantage of the
carry-back, carry-forward provisions in the Tax Code, and assume that the current provisions
were applicable in 2015. How much tax did the company pay in 2018?
a. $132,300,000
b. $121,275,000
c. $101,675,000
d. $135,975,000
e. $122,500,000

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