# Finance: Progressive Tax and Assigned Application Problems Essay

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Pages: 4

Week 1 Assigned Application Problems

Question 2-7. The Tally Corporation has a taxable income of \$365,000 from operations after all operating costs but before (1) interest charges of \$50,000, (2) dividends received of \$15,000, (3) dividends paid of \$25,000, and (4) income taxes. What are the firm’s income tax liability and its after-tax income? What are the company’s marginal and average tax rates on taxable income?

Income after operating costs 365,000
Interest expense -50,000
Taxable dividends received +4,500 Only 30% of the 15,000 in dividends received are taxable
Taxable income= 319,500
Taxes -107,855
Non-taxable dividends +10,500
Net Income = 222,145
22,250+.39(319,500-100,000) = 107,855
107,855/319,500= 33.76%

Tax Liability= \$107,855
After tax income =\$222,145
Marginal Tax Rate= 39%
Average Tax Rate = 33.76%

Question 3-15 parts e & f. Perform a common size analysis. What has happened to the composition (that is, percentage in each category) of assets and…