medium · Financial Accounting liabilities-bonds-payable

A firm has $1,000,000 in pretax book income and a statutory rate of 21%. Its only reconciling items are $100,000 in tax-exempt interest and $50,000 in non-deductible entertainment expenses.

What is the firm's Effective Tax Rate (ETR)?

  1. 21.00%
  2. 19.95%
  3. 18.90%
  4. 22.05%

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