Question
Assume that the following tax rates apply: Corporate Income Tax = 20%; Personal Income Tax = 25%; Dividend Income Tax = 12%. The companys Earnings
Assume that the following tax rates apply:
Corporate Income Tax = 20%; Personal Income Tax = 25%; Dividend Income Tax = 12%. The companys Earnings before interests and taxes (EBIT) is $500.
What would be the aftertax return for:
- Equity holders in an all-equity company (given 100% dividend pay-out)
- Debt holders of the company paying $500 interest to them
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Financial Accounting Reporting Analysis And Decision Making
Authors: Shirley Carlon, Rosina Mladenovic Mcalpine, Chrisann Palm, Lorena Mitrione, Ngaire Kirk, Lily Wong
5th Edition
0730313743, 978-0730313748
