Corporate Finance: A Focused Approach (mindtap Course List)
7th Edition
ISBN: 9781337909747
Author: Michael C. Ehrhardt, Eugene F. Brigham
Publisher: South-Western College Pub
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Chapter 2, Problem 10P
Summary Introduction
To determine: Taxable income, tax expense and net income.
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The Talley Corporation had taxable operating income of $370,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $30,000, (2) dividends received of $25,000, and (3) dividends paid of $30,000. Its federal tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt.
What is the firm’s taxable income? Round your answer to the nearest dollar.
The Talley Corporation had taxable operating income of $425,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $40,000, (2) dividends received of $10,000, and (3) dividends paid of $25,000. Its federal tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt.
What is the firm’s taxable income? Round your answer to the nearest dollar.
What is the after-tax income? Round your answers to the nearest dollar.
The Talley Corporation had taxable operating income of $365,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $50,000, (2) dividends received of $15,000, and (3) dividends paid of $25,000. Its federaltax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. What is the taxable income? What is the tax expense? What is the after-tax income?
Chapter 2 Solutions
Corporate Finance: A Focused Approach (mindtap Course List)
Ch. 2 - Prob. 1QCh. 2 - Prob. 2QCh. 2 - Prob. 3QCh. 2 - Prob. 4QCh. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 1PCh. 2 - Prob. 2P
Ch. 2 - Hollys Art Galleries recently reported 7.9 million...Ch. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Zucker Inc. recently reported 4 million in...Ch. 2 - Prob. 8PCh. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - Prob. 12PCh. 2 - Prob. 13PCh. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - Rhodes Corporations financial statements are shown...Ch. 2 - The Bookbinder Company had 500,000 cumulative...Ch. 2 - Jenny Cochran, a graduate of the University of...Ch. 2 - Prob. 2MCCh. 2 - Prob. 3MCCh. 2 - Prob. 4MCCh. 2 - Prob. 5MCCh. 2 - Prob. 6MCCh. 2 - Prob. 7MCCh. 2 - Prob. 8MCCh. 2 - Prob. 9MCCh. 2 - Prob. 10MCCh. 2 - Prob. 12MC
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- Assume that a corporation has $100,000 of taxable income from operations plus $5,000 of interest income and $10,000 of dividend income. What is the company’s federal tax liability?arrow_forward10.) The Talley Corporation had taxable operating income of $365,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $50,000, (2) dividends received of $15,000, and (3) dividends paid of $25,000. Its federal tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. What is the taxable income? What is the tax expense? What is the after-tax income?tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. What is the taxable income? What is the tax expense? What is the after-tax income?arrow_forwardThe XYZ, Inc. reported $50 million of taxable income. Its federal tax rate was 21% (ignore any possible state corporation taxes). What is the company’s federal income tax bill for the year? Question 1 options: a) $11,500,000 b) $10,500,000 c) $12,100,000 d) $11,100,000arrow_forward
- Suppose that in addition to $18.05 million of taxable income, Texas Taco, Inc., received $2,300,000 of interest on state-issued bonds and $730,000 of dividends on common stock it owns in Arizona Taco, Inc. (Use corporate tax rate of 21 percent for your calculations.) a. Calculate Texas Taco’s income tax liability. (Enter your answer in dollars not in millions.) Income tax liability --- b. What are Texas Taco’s average and marginal tax rates on taxable income? (Round your answers to 2 decimal places.) Average tax rate % Marginal tax rate %arrow_forwardThe Ohio Corporation had a 20XX taxable income of $50,000,000 from operations after all operating costs but before 1. interest charges of $500,000, 2. dividends received of $45,000, 3. dividends paid of $10,000,000, and 4. income taxes. Using the tax schedule in Table 2.3. what is Ohio's income tax liability? What are Ohio's average and marginal tax rates on taxable income from operations? Multiple Choice $17,329,725, 34.66%, 35%, respectively $13,829,725, 27.66%, 35%, respectively $17,340.750, 34.68%, 35%, respectively $6,416,667, 12.83%, 35%, respectivelyarrow_forwardA corporation has a taxable income of $2,122,324. At this income level, the federal income rate is 49%, the state tax rate is 18%, and the local tax rate is 9%. If each tax rate is applied to the the total taxable income, the company would have to pay $2,122,324 * 0.49 in federal taxes. Luckily for the corporation, the taxes paid are deducted as described above. How much is paid in federal taxes if the customary deductions are taken into consideration?arrow_forward
- A corporation has a taxable income of $2,302,253. At this income level, the federal income rate is 49%, the state tax rate is 20%, and the local tax rate is 13%. If each tax rate is applied to the the total taxable income, the company would have to pay $2,302,253 * 0.49 in federal taxes. Luckily for the corporation, the taxes paid are deducted as described above. How much is paid in federal taxes if the customary deductions are taken into consideration? $ . Round to the nearest dollar.arrow_forwardThe ABC Corporation has net income reported on its books of $120, 500. For the current year, the corporation had federal income tax expense of $30,000, a net capital loss of $ 8,300, and tax-exempt interest income of $5,300. The company deducted depreciation of $20,000 on its tax return and $15,000 on its books. Calculate the ABC Corporation's taxable income.arrow_forwardFox Corporation reported pretax book income of $5,250,000. During the current year, the reserve for warranties increased by $300,000. In addition, tax depreciation exceeded book depreciation by $400,000. Finally, Fox received $50,400 of tax-exempt interest from municipal bonds. Compute Fox’s current income tax expense or benefit.arrow_forward
- Li Corporation reported pretax book income of $600,000. Tax depreciation exceeded book depreciation by $400,000. In addition, the company received $300,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $50,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit. X Answer is complete but not entirely correct. Deferred income tax expense $ 10,000 Xarrow_forwardDuring the current year, the Squamata Corporation, a regular C corporation, has $30,000 in ordinary income, a longterm capital loss of $20,000, and a short-term capital gain of $10,000a. Calculate the Squamata Corporation's tax liability for the current year. b. Explain the nature and amount of any carrybacks or carryforwards that the corporation isentitled to use.arrow_forwardIn the year 2018, a corporation made $20.4 Million in revenue, $2.42 Million of operating expenses, and depreciation expenses of $7.37 Million. The state income tax rate is 1010% and the federal income tax rate is 21%. How much (a) state income tax, and (b) federal income tax will this corporation pay in this tax year? Assume that the state income tax is a tax-deductable expence when filing federal income tax. The approximate state income tax rate is $ The approximate federal tax is $ The combined effective income tax rate is The ATCF for the year 2018 is $ Million (Round to three decimal places.) _Million. (Round to three decimal places.) (Round to the nearest decimal.) Million (Round to three decimal places.)arrow_forward
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