Interest versus dividend expenseMichaels Corporation expects earnings before interest and taxes to be

$41,000

for the current period. Assuming a flat ordinary tax rate of

35%,

compute the firm's earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions:

a. The firm pays

$12,500

in interest.

b. The firm pays

$12,500

in preferred stock dividends.