Your corporation has the following cash flows:

Operating income

$250,000

Interest received

10,000

Interest paid

45,000

Dividends received

20,000

Dividends paid

50,000

If the applicable income tax rate is 40 percent, and if 70 percent of dividends received are exempt from

taxes, what is the corporation's tax liability?

a.

$74,000

b.

$88,400

c.

$91,600

d.

$100,000

e.

$106,500