Fi515 Week 1

(2-6) call forthment of Retained Earnings Net income = $50 unity thousand trillion Retained clams = $810 million prior carry earnings = $780 million dubiousness: How much in dividends was paid to sh arholders during the year? Formula: Dividend paid = Previous pick up contain earnings +Net Income New balance retained earnings Dividend paid = $780 million + $50 million - $810 million = $20 million in dividends was paid to shareholders during the year (2-7) Corpo range assess Liability revenueable income = $365,000 delight charges = $50,000 Dividends current = $15,000 Dividends paid = $25,000 Questions: What are the firms income tax revenue obligation and its after-tax income? What are the companys marginal and bonny tax pass judgment on taxable income? Income tax liability: assessable income = $365,000 recreate charges = $50,000 Dividends received = $15,000x(1-0.70) = $4,500 $365,000 - $50,000 + $4,500 = $319,5000 Marginal rate ( somatic appraise Rate table, pg. 71) = 39% Income tax liability = $22,250 + ($319,500-100,000)x0.39 = $107,855 After-tax income: Taxable income = $319,000 Tax liability = $107,855 Non-taxable dividends received: $15,000 x (0.70) = $10,500 After-tax income = $319,000 - $107,855 + $10,500 = $222,145 Average tax rate: Average tax rate = Taxable interest income / Taxable operating income = $107,855 / $319,500 = $0.337574x0.100 = 33.8% (2-9) Corporate After-Tax Yield Invest = $10,000 AT&T Bonds = 7.5% State of Florida muni bonds = 5% (not taxable) AT&T preferable persuade with dividends = 6% Tax rate = 35% Dividends received = 70% (tax exempt) Question: aline the after-tax rates of return on all third securities. AT&T bonds: 7.5% x $10,000 = $750 Taxes: $750 x 0.35 = $262.50 $750 - $262.50 = $487.50 Yield AT&T bonds = $487.50/$10,000 = 0.04875 x 100% = 4.875% AT&T preferred stock: 6% x $10,000 = $600 Dividends recei ved: $600 x 0.7 = $420 $600 - $420 = $ clxx! x Taxes: $one hundred eighty x...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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