You own 30,000 shares of a (C) Corporation, which has 100,000 shares outstanding. It produces $1,200,000 in pre-tax profits this year. Its tax rate is 20% and its payout ratio is 75%. You are in the 40% (combined) tax bracket. The tax on your dividends this year will be:
a) 40% x (30,000/100,000) x 1,200,000 x 25% = 36,000
b) 40% x (30,000/100,000) x 1,200,000 = 144,000
c) 40% x (30,000/100,000) x 80% x 1,200,000 = 115,200
d) 40% x (30,000/100,000) x 80% x 1,200,000 x 75% = 86,400
e) 40% x (30,000/100,000) x 80% x 1,200,000 x 25% = 28,800
Answer: d) 40% x (30,000/100,000) x 80% x 1,200,000 x 75% = 86,400
Business
You might also like to view...
The incidence of alcohol and chemical abuse among salespeople as compared to other professionals is:
a. the same. b. greater among salespeople. c. less among salespeople. d. unknown. e. twice as great.
Business
The coupon value of a bond is the face value of the bond
Indicate whether this statement is true or false.
Business