Reference no: EM132650728

First Bank has some question as to the tax-free nature of $6 million of governmental bonds held in its investment portfolio. This amount is excluded from First Bank's taxable income of $90 million. Management has determined that there is a 65% chance that the tax-free status of this entire amount of interest can't withstand scrutiny of taxing authorities.

Question 1: Assuming a 25% tax rate, what amount of income tax expense should the bank report? (Enter your answer in millions rounded to 2 decimal place (i.e., i.e., 5,500,000 should be entered as 5.50).)