26. Inky Inc. reported the following financial information in 2006. Operating income (EBIT) $650,000 Interest $430,000 Dividends

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26. Inky Inc. reported the following financial information in 2006.

Operating income (EBIT) $650,000 Interest $430,000 Dividends from Printers Inc. not included in operating income (Inky owns 3% of Printers) $ 20,000 Dividends paid to Inky’s stockholders $ 50,000

a. What is Inky’s tax liability? (Use the corporate tax schedule on page 48.)

b. What is Inky’s marginal tax rate?

c. What is Inky’s average tax rate?

d. Explain why only one of the rates in b and c is relevant for financial decisions?

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Practical Financial Management

ISBN: 9780324422634

5th Edition

Authors: William R. Lasher

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Question Posted: Oct 17, 2024 08:01 AM

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26. Inky Inc. reported the following financial information in 2006. Operating income (EBIT) $650,000 Interest $430,000 Dividends

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