FI515 week 1 - (2-6 In its most recent financial statements Newhouse Inc reported $50 million of net income and $810 million of retained earnings The

FI515 week 1 - (2-6 In its most recent financial statements...

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(2-6) In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings were $780 million. How much in dividends was paid to shareholders during the year? Beginning Retained Earnings = $780,000,000 Net Inc. = $50,000,000 50 +780 - x = 810 830 - x =810 sub "830" from both sides and: x = 20 Shareholders were paid $20 Million in dividends. (2-7) The Talley Corporation had a taxable income of $365,000 from operations after all operating costs but before (1) interest charges of $50,000, (2) dividends received of $15,000, (3) dividends paid of $25,000, and (4) income taxes. What are the firm’s income tax liability and its after-tax income? What are the company’s marginal and average tax rates on taxable income? Dividend Received – 70% is excluded and they will be responsible for 30% Op Inc = $365,000 (Subtract Interest Charges): $50,000 +15,000 * 0.30 = 4,500 Total Taxable Income = $319,500 Tax brack range = $100,000 - $335,000 $22,250 39% taxes are paid for any taxable income over $100,000 Total Tax Liability = 22,500 + 39% * (319,500 – 100,000)
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