Question

As a corporation, you want to distribute money to shareholders as a dividend. If the dividend is taxed at a rate of 20% and the dividend is $1 per share, how much money will a shareholder of 10,000 shares get after-tax? a) $8,000 b) $8,250 c) $8,400 d) $9,000

Answer 1

$8000

Step-by-step explanation:

Answer 2

a) $8,000

Step-by-step explanation:

The tax rate is 20% of the dividend. If the dividend is $1 per share, the actual tax per share is 20 percent of $1.

=20/100 x $1

=0.2 x$1

=20cents per share

A shareholder will receive $1- 20 cents as dividends per share

=80 cents or $0.80 per share.

A shareholder with 10,000 shares will get

=10,000 x $.80

=$8,000