Question
The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock Expected Dividend Expected Capital Gains A
The expected pretax return on three stocks is divided between dividends and capital gains in the following way:
Stock Expected Dividend Expected Capital Gains
A $ 0 $ 10
B $ 5 $ 5
C $10 $ 0
a.
If each stock is priced at $175, what are the expected net returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21%, the expect tax rate on dividends received by corporations is 6.3% and (iii) an individual with an effective tax rate of 10% on dividends and 5% on capital gains?(Do not round intermediate calculations. Round your answers to 2 decimal places.)
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