Q:

You are a shareholder in a C corporation. The corporation earn $3 per share before taxes. Once it has paid taxes, it will distribute the rest of its earning to you as a dividend. The corporate tax rate is 35 % and the personal tax on ( both dividend and non-dividend) income is 20%. How much is left for you after all taxes are paid??The amount that remains is $ Per share

Accepted Solution

A:
Answer:The money left for you is $1.56 per share.Step-by-step explanation:Consider the provided information.The corporation earn $3 per share before taxes.Earnings of the corporation = $3/share The corporate tax rate is 35 % = 0.35Therefore, the dividend paid per share = 3Γ—(1 -0.35) = $1.95/share The dividend is the personal income so taxed 20% Β = 0.20 Therefore,Final amount received = 1.95Γ—(1 - 0.2) = $1.56/shareHence, the money left for you is $1.56 per share.