Lintner Beverage Corp. reported the following information from their financial statements:
Operating income (EBIT) = $14,000,000
Interest payments on long-term debt = $1,750,000
Dividend income = $1,000,000
Calculate Lintner's total tax liability using the corporate tax schedule below:
Taxable Income Tax on Base of Bracket Percentage on Excess above Base
$0-$50,000 $0 15%
$50,000-$75,000 7,500 25
$75,000-$100,000 13,750 34
$100,000-$335,000 22,250 39
$335,000-$10,000,000 113,900 34
$10,000,000-$15,000,000 3,400,000 35
$15,000,000-$18,333,333 5,150,000 38
Over $18,333,333 6,416,667 35
Assume a 70% dividend exclusion for tax on dividends.
a. $5,236,850
b. $4,077,875
c. $4,292,500
d. $4,378,350
e. $3,348,150
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