What are the shareholders earnings from the corporation

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Reference no: EM131013284

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?

Reference no: EM131013284

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