(Answered) Valle corporation has been in existence for ten years and

Finance

Valle Corporation has been in existence for ten years and during that time has been quite profitable. Except for the first year when the corporation sustained an operating loss, the company has experienced steadily increasing profits of $500,000 or better for the last nine years. All during this time, the corporation has never distributed any of its earnings. The corporation projects continued profits in the coming years but does not want to distribute the earnings as the owners are aware they will have to pay income tax on any dividends they receive. They decide they will leave the earnings in the corporation for as long as possible before taking any dividends. What can you tell the owners about this strategy?

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