The expected pretax return on three stocks is divided between dividends and capital gains in the following way:

Required:

a$.$ If each stock is priced at $$125,$ what are the expected net percentage returns on each stock to $($i$)$ 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 $6\mathrm{.}3\%),$ and

$($iii$)$ an individual with an effective tax rate of $10\%$ on dividends and $5\%$ on capital gains?

b$.$ Suppose that investors pay $40\%$ tax on dividends and $10\%$ tax on capital gains. If stocks are priced to yield an after$-$tax

return of $10\%,$ 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.

Required $A$

If each stock is priced at $$125,$ what are the expected net percentage returns on each stock to $($i$)$ 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 $6\mathrm{.}3\%),$ and

$($iii$)$ an individual with an effective tax rate of $10\%$ on dividends and $5\%$ on capital gains?

Note: Do not round intermediate calculations. Enter your answers as a percent rounded to $2$ decimal places.