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Interest versus dividend expense Porter Corporation forecast that it would generate earnin

Interest versus dividend expense Porter Corporation forecast that it would generate earnings before interest and tax of $250,000 for the current financial year. Assumea flat tax rate of 35% and all after-tax earnings are paid to the stockholders. a. If no interest payments are made, how much of the earnings are available to be P2-5 distributed to the stockholders? b. If an interest payment of $8,500 is made, how much of the earnings are available to be distributed to the stockholders? c. Why is there a difference in the tax liability in parts a and b?

Dec 04 2019 View more View Less

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