Question

A C corporation earns $ 9.20 per share before taxes and the company pays a dividend of $ 4.00 per share. 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​ after-tax amount an individual would receive from the​ dividend?

Answer 1

The answer is $4.27

Step-by-step explanation:

Solution

Given that:

AC corporation earns = $9.2 per share

Pays a dividend of =$4.00

The tax rate (Corporate ) is​ =39%

The tax rate on personal dividends is​= 15%

The tax rate for non-dividend personal income is​ = 36%

Now,

We must find the after tax rate amount of after tax rate an individual or a person would earn from the dividend

Thus,

The corporate tax =$9.40 * 39% = 3.67

Personal tax = $4.00 * 15% = 0.6

Now we find the total for the after tax rate

Total = $3.67 + $0.6

= $4.27

Therefore, the after tax rate an individual or a person would earn from the said divided is $4.27