# Interest versus dividend expense

Not what you're looking for?

Interest versus dividend expense. Michael's Corporation expects earnings before interest and taxes to be $38,000 for this period. Assuming an ordinary tax rate of 40%, compute the firm's earnings after taxes and earnings available for common shareholders (earnings after taxes and preferred stock dividends, if any) under the following conditions:

a) The firm pays $ 9,000 in interest

b) The firm pays $ 9,000 in preferred stock dividends

See attached document.

##### Purchase this Solution

##### Solution Summary

This solution discusses interest versus dividend expense.

##### Solution Preview

a) The firm pays $ 9,900 in interest

Interest is deducted before calculating taxes.

Earnings before interest and taxes = EBIT = $ 38,000

Interest = $9,900

Earnings before taxes= ...

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.

##### Measures of Central Tendency

Tests knowledge of the three main measures of central tendency, including some simple calculation questions.

##### Terms and Definitions for Statistics

This quiz covers basic terms and definitions of statistics.

##### Know Your Statistical Concepts

Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.