Company Z has $90,000 of taxable income from its operations, $5,000 of interest income, and $30,000 of dividend income from preferred stock it holds in other corporations. Its corporate tax rate is 25%. What is Company Zs tax liability? Assume a 50% dividend exclusion for tax on dividends.

a. 5100 b. 25,000 c. 60,100 d. 27500 e. 51,300

Houston Pumps recently reported $172,500 of sales, $140,500 of operating costs other than depreciation, and $9,250 of depreciation. The company had $35,250 of outstanding bonds that carry a 6.75% interest rate, and its federal-plus-state income tax rate was 25%. In order to sustain its operations and thus generate future sales and cash flows, the firm was required to spend $15,250 to buy new fixed assets and to invest $6,850 in net operating working capital. What was the firm's free cash flow?

a. 4213 b. 2286 c. 5354 d. 1860 e. 1978

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