The Cruise Ship Co. has taxable income of $4,000,000. The company paid out $550,000 in interest expense. The tax rate is 35 percent and the dividend payout ratio is 30 percent. What is the amount that was paid out in dividends?

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To find the dividends paid, first calculate the net income: Taxable income ($4,000,000) minus taxes (35% of $4,000,000 = $1,400,000) equals $2,600,000. The dividend payout ratio is 30%, so 30% of $2,600,000 is $780,000.