Kash Kow Inc. pays out all its after-tax earnings to shareholders in the form of dividends. Suppose

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Kash Kow Inc. pays out all its after-tax earnings to shareholders in the form of dividends. Suppose that in 2012 the company earned $1 per share before tax. Corporate income tax was paid at a rate of 25 percent. For a high-income earner living in Ontario, the personal tax on dividend income was 31.34 percent. How much of the original $1 per share would such a shareholder have left after all the taxes were paid?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Introduction To Corporate Finance

ISBN: 9781118300763

3rd Edition

Authors: Laurence Booth, Sean Cleary

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