New Hope Managed Care Inc.,is a for-profit managed care company. Last year, it reported $1,200,000 in income fromopertions, $250,000 in interest income from bonds it bought the previous year, and $60,000 in dividend income from shares in a large drug company. New Hope also has $200,000 in surplus funds that it is considering investin in bonds that pay interest of $10,000 per year or stock that pays dividends of $9,000 per year.
What is New Hope's tax liability?
What is New Hope's margina tax rate? Average tax rate?
Should New Hopee invest its surplus funds in bonds or stock?