You are a shareholder in a corporation. The corporation earns $20 per share before taxes. After it has paid taxes, the corporation chooses to retain this cash. The corporate tax rate is 30% and your tax rate on dividend income is 10% How much of the earnings remain after all taxes are paid? Selected Answer: a. 14$ Answers a. 14$

You are a shareholder in a corporation. The corporation earns $20 per share before taxes. After it has paid taxes, the corporation chooses to retain this cash. The corporate tax rate is 30% and your tax rate on dividend income is 10% How much of the earnings remain after all taxes are paid? Selected Answer: a. 14$ Answers a. 14$

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter3: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 15DQ

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QUESTION 1 "Consider a C corporation. The corporation earns $4 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 30%, the tax rate on dividend income is 20%, and the personal income tax rate is set at 28%. What are the shareholder's earnings from the corporation after all corresponding taxes are paid? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, enter 0.05 as an answer; or if the answer is $500, write enter 500 as an answer."
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Q No. 2 Read carefully the following scenarios and answer the questions asked in each scenario after analysis: A. You are a shareholder in a C corporation. The corporation earns $2.00 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. Assume the corporate tax rate is 40% and the personal tax rate on (both dividend and non-dividend) income is 30%. How much is left for you after all taxes are paid? B. Recall the last time you ate at an expensive restaurant where you paid the bill. Now think about the last time you ate at a similar restaurant, but your parents paid the bill. Did you order more food (or more expensive food) when your parents paid? Explain how this relates to the agency problem in corporations. C. You are the CEO of a company and you are considering entering into an agreement to have your company buy another company. You think the price might be too high, but you will be the CEO of the combined, much larger…
chapter 10 question 1 Assume an investor can earn 0.15 before tax and 0.12 after tax. A corporation can earn 0.14 after corporate tax. It has $100 available for investment. The tax rate on dividends and capital gains is 0.15. If the corporation retains for 15 years and then pays a dividend the investor nets $__________. If the corporation pays an immediate dividend, the investor will have (after 15 years) $_________
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You are a sharphutter in a C corporation The corporation eans $30 per share before taxes, Once it has paid taxes, wil debude the rest of és panings to you as a dividend The corporate tax 2 and the personal tax rate on dividend income is 43% How much is left for you aher al tases are paid? The amount that remans in S pershan (Round to 2 dema) A
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