1 consider a c corporation the corporation earns 5 per, Ask an Expert

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1) Consider a C corporation. The corporation earns $5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 100% of its earnings to its shareholders as a dividend. The corporate tax rate is 40%, the tax rate on dividend income is 28%, and the personal income tax rate is set at 28%.

a) What are the shareholder's earnings from the corporation after all corresponding taxes are paid?

b) How much is the total effective tax rate on the corporation earnings?

2) Consider a C corporation. The corporation earns $5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 50% of its earnings to its shareholders as a dividend. The corporate tax rate is 40%, the tax rate on dividend income is 28%, and the personal income tax rate is set at 28%

a) What are the shareholder's earnings from the corporation after all corresponding taxes are paid?

b) How much is the total effective tax rate on the corporation earnings?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91728972

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