Determine the firm’s cost of capital Using the corporate tax rates provided in the text, what is the corporate income tax paid on earnings of A. $1,000 B. $10,000 C. $100,000 D $1,000,000 E. $10,000,000

Finance Basics

Given the following information

interest rate                        8%

tax rate                              30%

dividend                                $1

price of common stock           $50

growth rate of dividends            7%

debt ratio                                 40%

Determine the firm’s cost of capital

Using the corporate tax rates provided in the text, what is the corporate income tax paid on earnings of

A.   $1,000                   B. $10,000                 C. $100,000      D  $1,000,000           E.  $10,000,000