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Interest versus dividend expense Michaels Corporation expects earnings before interest and taxes to be $50,000 for the current period. Assuming an ordinary tax rate of %35, compute the firm's earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions:

a. The firm pays $12,000 in interest.

b. The firm pays $12,000 in preferred stock dividends.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91945206

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