XYZ Industries owns $40 million bonds of A Company A (bond rate of 7%). It also owns 5,000,000 shares of preferred stock of Company A, which constitutes 25% of all outstanding Company A preferred shares. In the past year, Company A paid the stipulated interest on its bonds and dividends of $2 per share on its preferred stock. The marginal tax rate of XYZ is 35%.

How much taxes must XYZ pay on this interest and dividend income?