Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The expected pretax return on three stocks is divided between dividends and capital gains in the following way Expected Dividend Stock B $0 Expected Capital

image text in transcribed
image text in transcribed
image text in transcribed
The expected pretax return on three stocks is divided between dividends and capital gains in the following way Expected Dividend Stock B $0 Expected Capital Gain $10 5 5 19 Required: a. If each stock is priced at $180, what are the expected net percentage returns on each stock to (1) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%). and (ii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? b. Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity Complete this question by entering your answers in the tabs below. Req A ReqB If each stock is priced at $180, what are the expected net percentage returns on each stock to (1) a pension fund that does not pay taxes, (II) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (l) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places) Show less Stock Pension Investor Corporation Individual % % % A BE a. If each stock is priced at $180, what are the expected net percentage returns on each stock to (1) a pension fund that does not pay taxes, (l) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (l) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? b. Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and each sell for? Assume the expected dividend is a level perpetuity. Complete this question by entering your answers in the tabs below. Req A Req B If each stock is priced at $180, what are the expected net percentage returns on each stock to (1) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (ill) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Show less Stock Pension Individual Investor Corporation 4.16% 4.54% 4.93% 4.74% 4.61% 5.26% 5.26% 5.26% B 4.471% ReqB > Required: a. If each stock is priced at $180, what are the expected net percentage returns on each stock to (1) a pension fund that does not pay taxes, (i) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%) and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? b. Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. Complete this question by entering your answers in the tabs below. Req A Req B Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an after-tax return of 8%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Price Stock B

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Info Business Fast Startup Guide For Beginners

Authors: Mr. Oleg Kolpakov

1st Edition

1539887685, 978-1539887683

More Books

Students also viewed these Finance questions

Question

Developing a social venture marketing plan.

Answered: 1 week ago