Papa Roach Exterminators, Inc. has sales of $512,000, costs of $265,000, depreciation expense of $32,000, interest expense of $20,000, and a tax rate of 35 percent.

If the firm paid out $63,000 in cash dividends, the addition to retained earnings is $_____?

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First you need to calculate EBIT, then you calculate the amount of taxes, then you can calculate Net Income.

You will subtract your cash dividends from your Net Income and you will arrive at your answer.

The payment of dividends to the shareholders is immaterial to the problem.