15.9 Alpha Corporation earned $150 million in beforetax profits in 1996. Its corporate tax rate is 35

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15.9 Alpha Corporation earned $150 million in beforetax profits in 1996. Its corporate tax rate is 35 percent. Daniel Reptella, who owns 20 percent of the firm’s shares, has a personal marginal tax rate of 40 percent. From Daniel’s perspective, what is the effective tax rate on Alpha’s profits if its entire after-tax profits are distributed as a dividend?

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Financial Markets And Corporate Strategy

ISBN: 9780071157612

2nd Edition

Authors: Mark Grinblatt, Sheridan Titman

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