Question

Rate	Income Bracket
10%	$0---$9,525
12%	$9,525---$38,700
22%	$38,700---$82,500
24%	$82,500---$157,500
32%	$157,000---$200,000
35%	$200,000---$500,000
37%	$500,000 and up

Calculate the tax bill on $75,000 in taxable income:

A $12,439.50

B $14,089.50

C $16,800.00

D $17,600.00

How much would you bring home after taxes on the next $10,000 (above $75,000) in taxable income?

A $7,650

B $7,700

C $7,750

D $7,800

How would Net Working Capital (NWC) be affected if Accounts Payable decreased?

A Decrease in NWC

B Increase in NWC

C No Change

Answer 1

Calculation of tax bill on $75,000 taxable income
Taxable income		Tax rate	Tax amount
$9,525	$9,525	10%	$952.50
$29,175	38700-9525	12%	$3,501.00
$36,300	75000-38700	22%	$7,986.00
$75,000			$12,439.50
Thus, the tax bill on $75,000 taxable income is $12,439.50 (Option A).
Calculation of amount taken home after taxes on the next $10,000.
The $10,000 would be taxable at 22% and so tax amount would be $2,200 ($10,000*22%)
After tax amount = (10000-2200) = $7,800.
Thus, correct answer is option D
Net working capital is calculated as current assets less current liabilities.
Accounts payable is current liabilities of company and so with decrease in accounts payable, current liabilities would decrease which would increase the net working capital.
Thus, net working capital would increase if accounts payable decrease.