Your Corporation Has the Following Cash Flows If the Applicable Income Tax Rate Is 40 Percent, and

Multiple Choice

Your corporation has the following cash flows: $\begin{array}{llcc} \text { Operating income } &\$250,000\\ \text { Interest received } &10,000\\ \text { Interest paid } &45,000\\ \text { Dividends received } &20,000\\ \text { Dividends paid} &50,000\\\end{array}$
If the applicable income tax rate is 40 percent, and if 70 percent of dividends received are exempt from taxes, what is the corporation's tax liability?

A) $74,000
B) $88,400
C) $91,600
D) $100,000
E) $106,500