5 12.5 points Problem 17-24 Payout Policy and Taxes (LO4) The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gain A $0 B C 5 10 $10 5 0 Required: a. If each stock is priced at $195, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 10% on dividends and 5% on capital gains? b. Suppose that investors pay 40% tax on dividends and 10% tax on capital gains. If stocks are priced to yield an after-tax return of 10%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B If each stock is priced at $195, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 10% on dividends and 5% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Stock Pension Investor Corporation Individual A 5.13% B 5.13% 4.05 % 6.71 % 4.05 % C 5.13 % 6.94 % 9.00% 9.37% Rug A Ren R Show lessA