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Calculating earnings for common Shareholders

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Michael Corp expect earning before interest and taxes to $40,000. assuming a ordinary tax rate of 40%. Compute the firm's earnings after taxes and earnings available for common stockholders ( eanrings after taxes and preferrd stock holder, if any) under the following condictions...
a. firm pays 10,000 in interest..
b. firm pays 10,000 in preferred stock holder dividends.

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Solution Summary

This solution describes the steps for calculating earnings available for common shareholders under two different given conditions.

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Solution:

a.Michael's Corporation
Earnings before interest and taxes $40,000
Less: Interest expense $10,000
Earnings before ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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