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Can someone pleasr answer this ans show how to get the values for the table in part a? Thank you! 4 Problem 17-24 Payout Policy
Can someone pleasr answer this ans show how to get the values for the table in part a? Thank you!
4 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 10 points Expected Dividend Expected Capital Gain $18 Stock 10 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 45% (the effective tax rate on dividends received by corporations is 10.5%), 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.) Hint Investor Corporation Stock Pension Individual 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 sel for?Assume the expected dividend is a level perpetuity. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock Price 90.00 75.00 60.00Step by Step Solution
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