At the end of its third year of operations, the Best Manufacturing Co. had $4,500,000 in revenues; $3,375,000 in cost of goods sold; $450,000 in operating expenses, which included depreciation expense of $150,000; and had a tax liability equal to 35 percent of the firm's taxable income.
a. What is the net income of the firm for the year?
b. Best Manufacturing Co. plans to reinvest $50,000 of its earnings back in the firm. What does this plan leave for the payment of a cash dividend to Best's stockholders?