The expected pretax return on three stocks is dividend between dividends and capital gains in the following way: See the attachment.

Assignment Print View 1 of 2 http://ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQ... The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Stock A B C Expected Dividend $0 14 19 Expected Capital Gain $19 14 0 a. If each stock is priced at $100, 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 45% (the effective tax rate on dividends received by corporations is 10.5%), and (iii) an individual with an effective tax rate of 10% on dividends and 5% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Stock Pension Investor Corporation Individual A 5.00 % % % B 5.00 % % % C 5.00 % % % 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. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Stock Price A B C References 10/11/2017, 7:42 PM Assignment Print View 2 of 2 http://ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQ... Worksheet Difficulty: Intermediate Learning Objective: 17-04 Show how market imperfections, especially the different tax treatment of dividends and capital gains, can affect payout policy. 10/11/2017, 7:42 PM