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    Pacino12's Avatar
    Pacino12 Posts: 1, Reputation: 1
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    #1

    Sep 21, 2010, 02:18 PM
    Cash dividends and retained earnings
    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 $_____?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Sep 22, 2010, 03:29 AM

    Please read the guidelines for posting homework that are at the top of this forum:
    https://www.askmehelpdesk.com/financ...-b-u-font.html
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #3

    Sep 22, 2010, 02:33 PM

    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.
    markjrivera's Avatar
    markjrivera Posts: 9, Reputation: -1
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    #4

    Sep 30, 2010, 03:17 AM

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