Fi515 Week 1

(2-6) call forthment of Retained Earnings
Net income = $50 one thousand million
Retained clams = $810 million
Previous carry earnings = $780 million
dubiousness: How much in dividends was paid to shareholders during the year?
Formula: Dividend paid = Previous brace retained 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 outrank assess Liability
revenueable income = $365,000
delight charges = $50,000
Dividends received = $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 rates on taxable income?
Income tax liability:
assessable income = $365,000
Interest charges = $50,000
Dividends received = $15,000x(1-0.70) = $4,500
$365,000 - $50,000 + $4,500 = $319,5000
Marginal rate (Corporate Tax 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 stock with dividends = 6%
Tax rate = 35%
Dividends received = 70% (tax exempt)
Question: Find 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 received: $600 x 0.7 = $420
$600 - $420 = $ clxxx
Taxes: $180 x...If you want to get a full essay, order it on our website: Orderessay



If you want to get a full essay, wisit our page: write my essay .