MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Use the following information to answer the following question(s).

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.

1) Estimate A & K's total tax liability for 2004 (round to the nearest number) assuming the following tax table

Marginal tax rates Income levels

15% 0 50000

25% 50001 75000

34% 75001 100000

39% 100001 335000

34% 335001 10000000

35% 10000001 15000000

38% 15000001 18333333

35% over 18333333

1) _______

A) $6,080,000. B) $5,488,250. C) $5,600,000. D) $5,530,000.