Use the Following Information to Answer the Following Question(s)

question 19

Multiple Choice

Use the following information to answer the following question(s) .
In 2004,A & K,Inc.expects operating income (earnings before interest and taxes) of $18,000,000.In addition,the corporation has $20,000,000 of debt outstanding with a 10 percent interest rate and will pay $1,000,000 in dividends to its common stockholders.
-A & K's marginal tax rate for 2004 will be:

• A)38 percent.
• B)35 percent.
• C)34 percent.
• D)unknown because too little information is provided.

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Definitions:

Voucher

A document or code that entitles the holder to a discount or that may be exchanged for goods or services.

Installments

Payments divided into smaller, manageable parts over a set period, allowing for the purchase of goods or repayment of loans.

Truth in Lending Act

A U.S. federal law designed to promote informed use of consumer credit by requiring disclosures about its terms and cost.

Discretion

The quality of behaving or speaking in such a way as to avoid causing offense or revealing confidential information.