a) Assume an imputation tax system and show the values for A, B, C and D below. Show all workings and attach a minus sign (-) to the value if it is a cash outflow. (4 marks)

Marginal tax rate	45%	19%
Corporate level
Net Profit Before Tax	$4	$4
Corporate tax (30%)	-$1.20	-$1.20
Net Profit After Tax	$2.80	$2.80
Shareholder level
Cash dividends	$2.80	$2.80
Gross-up adjustment	A	A
Grossed-up dividends
Personal Tax
Franking credit
Tax payable or refund	B	C
Dividend after taxes		D

b) Richmond Ltd has generated profits before tax in Australia of $20 million. Its corporate tax rate is 30% and Richmond has a retention rate of 60%. What is the value of franking credits? What is the value of undistributed franking credits? (3 marks)