Griffey Communications recently realized $100, 000 in operating income. The company had interest income of $35,000 and realized $70, 000 in dividend income. The company's interest expense was S 60,000. Its corporate tax rate is 25%. Griffey is a small company, so it is not subject to the interest expense deduction limitation. Assume a 50% dividend exclusion for taxes on dividends. Which of the following most closely matches the tax liability of Griffey Communications? a. $51, 250 b. $42, 500 c . $36, 250 d. $18,750 e. $27,500

Griffey Communications recently realized $100, 000 in operating income. The company had interest income of $35,000 and realized $70, 000 in dividend income. The company's interest expense was S 60,000. Its corporate tax rate is 25%. Griffey is a small company, so it is not subject to the interest expense deduction limitation. Assume a 50% dividend exclusion for taxes on dividends. Which of the following most closely matches the tax liability of Griffey Communications? a. $51, 250 b. $42, 500 c . $36, 250 d. $18,750 e. $27,500

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section2.A: Taxes

Problem 2P

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