Your Corporation Has the Following Cash Flows

question 50

Multiple Choice

Your corporation has the following cash flows:
Operating income:$250,000
Interest received:10,000
Interest paid:45,000
Dividends received:20,000
Dividends paid:50,000
If 70 percent of dividends received are excludable,and if the applicable tax table is as follows,
What is the corporation's tax liability?

• A) $57,530
• B) $65,350
• C) $69,440
• D) $88,350
• E) $100,280

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Definitions:

Required Rate

The minimum return an investor expects to achieve by investing in a particular asset, considering the risk associated with it.

Discount Rate

The interest rate applied in discounted cash flow analysis for the purpose of determining the present value of future cash inflows.

Compounded Monthly

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, done on a monthly basis.

Interest Saved

The amount of money that is not paid as interest due to paying off debt earlier or negotiating better rates.