Question
Consider a C corporation. The corporation earns $2.5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 95% of
"Consider a C corporation. The corporation earns $2.5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 95% of its earnings to its shareholders as a dividend. The corporate tax rate is 30%, the tax rate on dividend income is 20%, and the personal income tax rate is set at 28%.
(A) What are the shareholder's earnings from the corporation after all corresponding taxes are paid?
(B) How much is the total effective tax rate on the corporation earnings?
Note: Express your answers in strictly numerical terms.For example, if the answer is 5%, enter 0.05 as an answer and Round each answer to the third decimal space
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started