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Interest versus dividend expense Michaels Corporation expects earnings before interest and taxes to be $50,000 for this period. Assuming an 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 $ $12,000 in interest.
b. The firm pays $ $12,000 in preferred stock dividends.
Complete the fragment of Michaels? Corporation's income statement below to compute the? firm's earnings after taxes and earnings available for common stockholders under condition
(a?).
(Round to the nearest? dollar.)
EBIT _____
LESS: _____
EARNINGS BEFORE TAX ___
LESS: TAX (35) ___
EARNINGS AFTER TAX ____
LESS: PREFERRED DIVIDENDS ______
EARNINGS AVAILABLE FOR COMMON STOCK HOLDERS ____
PLEASE ANSWER ALL QUESTIONS
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