In 2004, A & K, Inc. expects operating income (earnings before interest and taxes) of $18,000,000. In addition, the corporation has $20,000,000 of debt outstanding with a 10 percent interest rate and will pay $1,000,000 in dividends to its common stockholders.
Assume that A & K will receive no other sources of income during 2004. A & K's taxable income for 2004 will be:
a) $17,000,000.
b) $15,000,000.
c) $16,000,000.
d) $18,000,000.