# A Question on this non-cfa Corporate finance question?

How did he get tax rate 8.4%?

The tax rate is 30% (given in (iii)); 8.4 is the tax _ amount _, not the tax rate: £8,400.

As the tax is payable in 4 installments – payable in months 7, 10, 13, and 16 – and only two of those fall in the first year (months 7 and 10), I presume that the payments are 7.5% (= 30% ÷ 4) each, so that the tax paid in the first year is 15%(£56,000) = £8,400.

Sorry for the typo, Magician. Thank you for the explanation.

I had this cockiness that since I’ve studied (or I think i have) corporate finance in the CFA Level 1 program, this would be a cake walk. Reality hits hard!

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Edit: So following through in 2nd, 3rd and 4th year, corp tax paid will be 16,800 (56K*30%). But what would be the reason that stops me from using 8,400 (56K*15%)? Is it correct to assume months 13th, 16th, 20th, 24th,… so on will fall in one year so we go ahead with 30%?

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Edit2: Ahh it seems I have made my edits too late. That’s okay thanks again! (and Merry Christmas)

My pleasure.

Merry Christmas!