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Last year the Selling Corporation had earnings before interest and taxes (operating income) equal to $1 million. It paid $200,000 in dividends to its stockholders
Last year the Selling Corporation had earnings before interest and taxes (operating income) equal to $1 million. It paid $200,000 in dividends to its stockholders and $100,000 in interest to its creditors. During the year, the company also repaid a bank loan of $150,000. Assuming a corporate income tax rate of 40 percent on all taxable income, calculate the Selling Corporations tax bill.
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