Kristen, the president and sole shareholder of Egret Corporation, has earned a salary bonus of $76,000 for the current year. Because of the lower tax rates on qualifying dividends, Kristen is considering substituting a dividend for the bonus.

Assume that the tax rates are 24% for Kristen and 21% for Egret Corporation. Round your answers to nearest dollar, if required.

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a. How much better off would Kristen be if she were paid a dividend rather than salary? If Kristen were paid a bonus, she would receive $fill in the blank 30e3b2feefb6fff_1 after taxes. If Kristen receives a dividend rather than salary, she would receive $fill in the blank 30e3b2feefb6fff_2 after taxes. Thus, she would be better off by receiving the

bonusdividend

.

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b. How much better off would Egret Corporation be if it paid Kristen a salary rather than a dividend?

The net after-tax cost of the bonus for Egret Corporation would be $fill in the blank c7cd35000029063_1 and the net after-tax cost for the dividend would be $fill in the blank c7cd35000029063_2 . Therefore, Egret would be better off by $fill in the blank c7cd35000029063_3 if it paid the

bonusdividend

.

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c. Assume Egret Corporation paid Kristen a salary bonus of $98,800 instead of a $76,000 dividend.

If Egret Corporation were to pay Kristen a salary bonus of $98,800 instead of a $76,000 dividend, Kristen would receive $fill in the blank 506fa6fc602505a_1 after taxes. The bonus would cost Egret Corporation $fill in the blank 506fa6fc602505a_2 after taxes.

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d. What should Kristen do?

Both Egret Corporation and Kristen are better off with the

$98,800 bonus$76,000 dividend

.

Kristen, the president and sole shareholder of Egret Corporation, has earned a salary bonus of $76,000 for the current year. Because of the lower tax rates on qualifying dividends, Kristen is considering substituting a dividend for the bonus. Assume that the tax rates are 24% for Kristen and 21% for Egret Corporation. Round your answers to nearest dollar, if required. a. How much better off would Kristen be if she were paid a dividend rather than salary? If Kristen were paid a bonus, she would receive 18,240 after taxes. If Kristen receives a dividend rather 11,400 after taxes. Thus, she would be better off by receiving the than salary, she would receive dividend b. How much better off would Egret Corporation be if it paid Kristen a salary rather than a dividend? The net after-tax cost of the bonus for Egret Corporation would be $ and the net after-tax cost for the dividend would be $ Therefore, Egret would be better off by $ if it paid the bonus c. Assume Egret Corporation paid Kristen a salary bonus of $98,800 instead of a $76,000 dividend. If Egret Corporation were to pay Kristen a salary bonus of $98,800 instead of a $76,000 dividend, Kristen would receive after taxes. The bonus would cost Egret Corporation $ after taxes. d. What should kristen do? Both Egret Corporation and Kristen are better off with the