Question
Asked Feb 2, 2020
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The Talley Corporation had taxable operating income of $365,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $50,000, (2) dividends received of $15,000, and (3) dividends paid of $25,000. Its federaltax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. What is the taxable income? What is the tax expense? What is the after-tax income?

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Expert Answer

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Step 1

The taxable income can be calculated with the help of below expression:

Finance homework question answer, step 1, image 1

Step 2

It is mentioned in question that 50% dividend received are tax exempt.

Taxable income is calculated below:

Finance homework question answer, step 2, image 1

Step 3

Tax expenses for the firm is calculated below:

Finance homework question answer, step 3, image 1

...

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