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Corporate Finance

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Contribution to Retained Earnings

CORPFN-DELHJY

ABC Corp. has sales of \$3,000,000, cost of goods sold is \$1,425,000, and total operating expenses are \$700,000.

The firm's interest expense is \$230,000, and the corporate tax rate is 40%. The firm paid dividends to preferred stockholders of \$30,000 and distributed \$60,000 in dividends to common stockholders.

What is ABC's "addition to retained earnings"?

A

$555,000

B

$387,000

C

$327,000

D

$297,000