Quantitative Problem: Andrews Corporation has income from operations of $235,000
ID: 2649281 • Letter: Q
Question
Quantitative Problem: Andrews Corporation has income from operations of $235,000. In addition, it received interest income of $23,500 and received dividend income of $32,100 from another corporation. Finally, it paid $10,400 of interest income to its bondholders and paid $47,200 of dividends to its common stockholders. Using the 2013 corporate tax schedule, what is the firm
2013 Corporate Tax RatesIf Your Taxable Income Is You Pay This
Amount on the
Base of the Bracket Plus This Percentage
on the Excess over the
Base (Marginal Rate) Average Tax
Rate at
Top of Bracket Up to $50,000 $0 15.0% 15.0% $50,000 - $75,000 7,500 25.0 18.3 $75,000 - $100,000 13,750 34.0 22.3 $100,000 - $335,000 22,250 39.0 34.0 $335,000 - $10,000,000 113,900 34.0 34.0 $10,000,000 - $15,000,000 3,400,000 35.0 34.3 $15,000,000 - $18,333,333 5,150,000 38.0 35.0 Over $18,333,333 6,416,667 35.0 35.0
Explanation / Answer
Taxable income = income from operations + interest income - Interest Expenses
Taxable income = 235000 + 23500 - 10400
Taxable income = $ 248,100
Firm