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P2-8 Tax Liability Wendt Corp, P3-6 Du Pont Gardial & Sons

Compute the federal tax liability (Wendt Corp) and DuPont Analysis (Gardial & Sons)

PART A:
1. What is Wendt Corporation federal income tax liability if they had $10,500,000 in taxable income?
2. If Wendt Corp receives an additional $1,000,000 in taxable interest income, how does the tax liability change?
3. Instead of taxable interest income, assume Wendt received an additional $1,000,000 in dividends on stock it own. How does this change the tax liability?

PART B:

If their return on assets is 12%, the profit margin on sales is 5%, and the return on equity is 20%, what is Gardial & Son's total asset turnover? What is the equity multiplier?

Solution Summary

Instructional notes and computations are provided to explain Wendt Corporation taxes and Du Pont Analysis for Gardial & Sons.

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