Refer back to problem 47. Suppose you bought the shares of Mighty Mixer for $50, received annual dividends of $2, and sold the shares for $55 three years after you bought them. What are your before- and after-tax rates of return on your investment?
In Problem 47
You live in British Columbia and your marginal federal tax rate is 22 %, your marginal provincial tax rate is 11.9%, the dividend gross-up factor is 125%, the federal dividend tax credit is 13.33% of grossed-up dividends, and the provincial dividend tax credit is 6.6% of grossed-up dividends. If you bought shares of Mighty Mixer for $50, received dividends of $2, and sold the shares for $53 one year after you bought them, what are your before - and after-tax rates of return?