Question

A C corporation earns $ 8.80 per share before taxes. The corporate tax rate is​ 39%, the personal tax rate on dividends is​ 15%, and the personal tax rate on​ non-dividend income is​ 36%. What is the total amount of taxes paid if the company pays a $ 6 ​dividend?

Answer 1

The dividends taxes are $0.90

Step-by-step explanation:

For the dividend, it will apply the dividend tax rate.

The other tax rates are irrelevant.

`dividends * (1-tax \:rate) = after-tax \: dividends`

`6* (1-.15) = 6 * 0.85 = 5.10`

`dividends * tax \:rate = dividends \: tax`

`6* 0.15 = 0.90`