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You are a shareholder in a C corporation. The corporation earns $ 20.00 per share before taxes. Once it has paid taxes it will retain
You are a shareholder in a C corporation. The corporation earns $ 20.00 per share before taxes. Once it has paid taxes it will retain $6 of after-tax earnings for reinvestments and distribute the rest of its earnings to you as a dividend. Assume the corporate tax rate is 40% and the tax rate on dividend income is 20%. What is the value of the dividend earnings received after all taxes are paid (per share)?
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