Builtrite had sales of $700,000 and COGS of $290,000. In addition, operating expenses were calculated at 25% of sales. Interest expense was based on $100,000 of bonds outstanding with an interest rate of 7%. Builtrite also received dividends of $40,000 and paid out common stock dividends of $25,000 to its stockholders. A long-term capital gain of $55,000 was realized during the year along with a capital loss of $45,000 Based on the above information, answer the following 5 questions:

1.What is Builtrites taxable income?

2.Based on their taxable income, what is Builtrites tax liability?

3.Builtrite has $7,000 in interest expense, how much does this interest expense cost Builtrite after taxes?

4.If Builtrite had experienced a long-term capital loss of $60,000 (instead of the $45,000 long-term capital loss stated in the problem), and still had the $55,000 long-term capital gain stated in the problem, which of the following is correct:

5.(This problem is not related to the above problem) Last year Builtrite had retained earnings of $160,000. This year, Builtrite had true net profits after taxesof $65,000 which includes common stock dividends received of $20,000. Builtite also paid a preferred dividend of $15,000. What is Builtrites new level of retained earnings?

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