What is the companys federal income tax bill

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Reference no: EM133485817

Question 1. Carter Swimming Pools has $16 million in net operating profit after taxes (NOPAT) in the current year. Carter has $13 million in total net operating assets in the current year and had $10 million in the previous year. What is its free cash flow? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar.

Question 2. Corporate Tax Liability

The Talley Corporation had taxable operating income of $490,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of $30,000, (2) dividends received of $25,000, and (3) dividends paid of $35,000. Its federal tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt.

What is the firm's taxable income? Round your answer to the nearest dollar.

What is the tax expense? Round your answers to the nearest dollar.

What is the after-tax income? Round your answers to the nearest dollar.

Question 3. The Wendt Corporation reported $55 million of taxable income. Its federal tax rate was 21% (ignore any possible state corporate taxes).

A. What is the company's federal income tax bill for the year? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar.$ .

B . Assume the firm receives an additional $2 million of interest income from some bonds it owns. What is the additional tax on this interest income? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar.$

C. Now assume that Wendt does not receive the interest income but does receive an additional $2 million as dividends on some stock it owns. Recall that 50% of dividends received are tax exempt. What is the additional tax on this dividend income? Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round your answer to the nearest dollar.$

Reference no: EM133485817

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