Problem 5-50 (L0. 4, 8) Kristen, the president and sole shareholder of Egret Corporation, has earned a salary bonus of $30,000 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. 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 is 22,800 J after taxes. If Kristen receives a dividend rather than salary, she would receive _ J after taxes. Thus, she would be better off by receiving the dividend ' J . b. How much better off would Egret Corporation be if it paid Kristen a salary rather than a dividend? The net aftertax cost of the bonus for Egret Corporation would be $ J and the net aftertax cost for the dividend would be $ 30,000 J . Therefore, Egret would be better off by _ J if it paid the bonus v J . c. Assume Egret Corporation paid Kristen a salary bonus of $35,000 instead of a $30,000 dividend. If Egret Corporation were to pay Kristen a salary bonus of $35,000 instead of a $30,000 dividend, Kristen would receive $ 26,000 X after taxes. The bonus would cost Egret Corporation $- J after taxes. d. What should Kristen do? Both Egret Corporation and Kristen are better off with a 30,000 dividend v X