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As we saw in class, the cash flows to investors are typically taxed twice by the government: first at the corporate level, and then at
As we saw in class, the cash flows to investors are typically taxed twice by the government: first at the corporate level, and then at the personal (i.e., investor) level. Given this harsh reality, calculate the TOTAL amount of taxes the government (i.e., the IRS or "Uncle Sam") will receive this year from a company that pays a corporate tax rate of 26% AND from the company's investors (i.e., its debtholders and stockholders), when each of these two investor groups is taxed at a rate of 47%. Assume that this year the company's EBIT will be $586,000 and its interest expense will be $263,000 and also assume that all the company's net income will be received by the stockholders as a dividend. Write the answer rounded to the nearest dollar. Thus, if you believe the answer is $2,348.55 then write 2349 as your answer. (Acceptable error = $500)
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