A firm pays a fully franked cash dividend of $50 to one of its Australian shareholders who has a personal marginal tax rate of 20%. The corporate tax rate is 30%. What will be the shareholder's personal tax payable due to the dividend payment? a. 14.2857 b. 10 c. -5 d. 21.4286 e. -7.1429

A firm pays a fully franked cash dividend of $50 to one of its Australian shareholders who has a personal marginal tax rate of 20%. The corporate tax rate is 30%. What will be the shareholder's personal tax payable due to the dividend payment? a. 14.2857 b. 10 c. -5 d. 21.4286 e. -7.1429

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 8P

See similar textbooks

Related questions

Q: How much of the earnings remains after all taxes are paid?

A: Earnings: These represent profits or losses made by the company from its overall business. It is…

Q: Mantle Corporation is considering two equally risky investments: ∙ A $5,000 investment in…

A: 1)

Q: A resident company pays a fully franked dividend of $700 to a resident shareholder. Advise the…

A: Hi student Since there are multiple sub parts, we will answer only first three sub parts.

Q: You are a shareholder in a C corporation. The corporation earns $2.01 per share before taxes. Once…

A: Given: Given: Pre-tax earnings per share $ 2.01 Corporate tax rate 22% Dividend…

Q: Candice Corporation, a domestic corporation sold its 100,000 shares with par value of P 15 per share…

A: Capital gains tax rate for a domestic corporation is 15%. No tax is to be paid if shares are sold to…

Q: 1. Ciabatta Corporation made a cash distribution on December 31 of $90,000 each to Giselle (owns…

A: If CEP is => Amount of distribution then it is a taxable dividend to shareholder then whether AEP…

Q: Mr. Redmare, a resident citizen of the Philippines, had shares of stock of a domestic corporation…

A: An individual is subject to tax on capital gains derived from sale of shares not traded on stock…

Q: Mr. Chua sold shares of stocks of a resident foreign corporation directly to a buyer. The shares…

A: Capital gain means the gain that is earned by assets, stock, and real estate property. In the stock,…

Q: Based on this information, which of the following is true? a. The value of Firm L is the same as…

A: Firm U Firm L EBIT 10000000 10000000 Less: Interest 0 6000 EBT 10000000 9994000 Less: Tax…

Q: Corporation Growth has $86,000 in taxable income, and Corporation Income has $8,600,000 in taxable…

A: It is given that:income of Corporation Growth is $86,000 and Corporation is $8,600,000. Tax slabs:…

Q: 1) Jensen Ltd is a firm that provides educational services tin the Australian marketplace. It is a…

A: Net Income and dividends: The Net income or the profits of a company for a stated period is defined…

Q: Assume a Modigliani and Miller (MM) world with taxes. Food Feast Ltd (FF) has €300 million in excess…

A: Given: Excess cash = 300 million Corporate tax rate = 25% Capital gains and income tax rate = 50%…

Q: You are a shareholder in a C corporation. The corporation earns $1.77 per share before taxes. Once…

A: The Corporation has the disadvantage of double taxation. The company pays taxes on its earnings and…

Q: Lythol mining is firm that has 32mn shares outstanding for his most recent financial year , Lythol…

A: Dividend is the amount which is earned by shareholders. When all the deductions have been made…

Q: Macmod sold 2,000 shares of his investment in stock eCare. The sale is made through the Philippine…

A: Percentage tax rate is the tax rate which is applied only on the specific transactions which has…

Q: BHP Billiton, An Australian company's stock, just paid $0.85 as a divident, which is expected to…

A: Particulars Amount Dividend 0.85 Dividend growth 5% Stock price 82 Debt 105% Interest 6%…

Q: n (CC) now operates as a "regular" corporation, but it is considering a switch to S Corporation…

A: In corporation there are corporate tax and personal taxes but in S corporation there is only…

Q: Ball is a C-Corporation. Ball made operating income (i.e. income before tax) of $3.47 per share last…

A: Money distributed by an S corporation is typically referred to as a distribution and is not taxed.…

Q: WACC Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock,…

A: Tax = 25%, rd = 6%, rps = 7.3%, and rs = 10% Weights: 30% debt, (Wd = 30%) 5% preferred stock,(Wps…

Q: An investor has a 38 percent ordinary income tax rate and a 20 percent long-term capital gains tax…

A: Dividend after tax must be equal to increase in price after capital gains tax.

Q: t corporation, its total tax liability is

A: Taxable income is the part of income for which the individual or organisation is liable to pay tax.…

Q: You are a shareholder in a C corporation. The corporation earns$ 1.86 per share before taxes. Once…

A: Dividends: The term dividends allude to that portion of proceeds of an organization which is…

Q: A firm is making a payment of $1000 to its investors. The firm is in the 35% marginal tax bracket.…

A: Firm have to make payments to investors as a return. Firm pays to investors after deduction if tax.

Q: What is the company’s after-tax weighted average cost of capital if Bulldogs Inc. pays taxes at the…

A: Capital Ratio Cost of capital Long-term liabilities 40% 10% Preferred stock 30% 10% Common…

Q: ABC Co (a resident private company) owns 20% of the shares in XYX Co (a resident public company).…

A: The franking credit or dividend imputation is type of credit available to shareholders in exchange…

Q: Zamboanga Corporation, a resident corporation, is a venturer in Southern Philippine Ventures (SPV),…

A: Received dividend income from domestic corporation (SPV) is exempted from the tax for intercompany…

Q: Suppose that MNINK Industries’ capital structure features 63 percent equity, 8 percent preferred…

A: WACC refers to a firm's weighted average cost of capital. It is the rate that a firm pays to its…

Q: A resident company pays a partly franked dividend of $700 (80% franked) to a resident shareholder.…

A: Comment- Multiple Question Asked. a) Individual who is subject to Top Marginal Tax Rates…

Q: Sunrise Manufacturing, Inc. Sunrise Manufacturing, Ic., a U.S. multinational company, has the…

A: Given: Tax rate = 40% Equity value = $40,000,000 Cost of equity = 20% Particulars Amount 25…

Q: Moncton Meats is a corporation that earned $3 per share before it paid any taxes. The firm retained…

A: Amount of earnings distributed per share = (Earnings per share - Earnings per share x corporate tax…

Q: A corporation has the following data for the year 2018: Gross Income, Philippines P1,000,000 Gross…

A: Income tax: A fee charged on the income generated by the corporations and the individuals is known…

Q: ABC Corporation, a foreign corporation sold its 100,000 shares with par value of P 15 per share to…

A: A foreign corporation's capital gains tax rate is 15% of the net capital gains with effect from…

Q: Barnes Co. currently has a capital structure that consists of 40% debt and 60% common equity.The…

A: Given information: Current capital structure is 40% debt and 60% equity, New capital structure is…

Q: Determine how much of the distribution is taxed as dividend income and how much is a return of…

A: Earnings & Profits: Earnings and profits are bookkeeping terms pertinent to investors in…

Q: You own 100 shares of a "C" Corporation. The corporation earns $5.00 per share before taxes. Once…

A: Number of shares owned = 100 Earning per share before tax = 5 Corporate tax rate = 40% Personal tax…

Q: You are told that one corporation just issued $100 million of preferred stock and anotherpurchased…

A: Since 70 percent of the preferred stock dividend is avoided from pay tax. Preferred stock is…

Q: A corporation has the following data for the year 2018: Gross Income, Philippines P1,000,000 Gross…

A: Taxable income is the part of income for which the individual or organisation is liable to pay tax.…

Q: Irene received the following dividends in 2021: • an eligible dividend of $16,550 a non-eligible…

A: Dividend: A dividend is a reward paid out of a company's net profits to the shareholders for…

Q: ethany owns an Australian share portfolio valued at $350,000. She receives dividends to the value of…

A: The dividends are franked to eliminate the double taxation on dividend.

Q: Mantle Corporation is considering two equally risky investments: ∙ A $5,000 investment in…

A: Investor shall be indifferent when the return on both the investment shall be equivalent.

Q: Canada bought 10% of the 200,000 common shares of Alberta Enterprises at a total cost of $13.00 per…

A: The answer is as fallows

Q: What is the cost of equity for the unleverd and levered firms? Given: Tax shield = 1,007.41 Size of…

A: Unlevered cost of equity is refers to the required rate of return that an unlevered organization…

Q: You are a shareholder in an S corporation. The corporation earns $2.36 per share before taxes. As a…

A: The income earned by the company is taxed at the corporate level and again when the owners receive…

Question

A firm pays a fully franked cash dividend of $50 to one of its Australian shareholders who has a personal marginal tax rate of 20%. The corporate tax rate is 30%.

What will be the shareholder's personal tax payable due to the dividend payment?

14.2857

-5

21.4286

-7.1429

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

VIEW

Step 2 Calculation of Shareholder's Personal Tax Payable

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

A US corporation A buys a share of preferred stock of another US firm B (non-affiliated) at $40 and sells it at year-end at $40. The firm A receives a $4 year-end dividend. The firm A is in the 21% tax bracket. What is their after-tax return for this investment during this period? Answer in percentage. Group of answer choices 0.63% 3.00% 5.00% 8.95% 9.37%
You are a shareholder in a C corporation. The corporation earns$ 1.86 per share before taxes. Once it has paid taxes, it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 35 %, and your personal tax rate on (both dividend and non-dividend) income is 30%. How much is left for you after all taxes are paid? (The amount left per share)(round to nearest cent)
1) Suppose your firm earns $9 million in taxable income.What is the firm's tax liability?What is the average tax rate?What is the marginal tax rate? 50,000 15%50,001 - 75,000 25%75,001- 100,000. 34%100,001-335,000 39%335,001-10,000,000 34%10,000,001-15,000,000. 35%15,000,001-18,333,333 38%18,333,334- 34% ....................................... 2) Entity X earns 6 $ per share. If the discount rate or equity cost to be applied by the company is 20% and the investment profitability is 16%;a) According to the Walter formula, what would the price of shares be in $ if the business had distributed 50% profit? b) According to Walter, is this the optimum rate of dividend distribution? Explain
You are a shareholder in a C corporation. The corporation earns $1.77 per share before taxes. Once it has paid taxes, it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 21% and your personal tax rate 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 how much per share? (Round to the nearest cent.)
You are a shareholder in a corporation. The corporation earns $8.00 per share before taxes. After it has paid taxes, it will distribute the rest of it's earnings to you as a dividend (We make this simplifying assumption, but should note that most corporations retain some of their earnings for reinvestment). The dividend is income to you, so you will then pay taxes on these earnings. The corporate tax rate is 25% and your tax rate on dividend income is 20%. How much of the earnings remains after all taxes are paid?
You are a shareholder in a corporation. The corporation earns $10 per share before taxes. Once it has paid taxes, it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 36%, the personal tax rate on dividend income is 20%, and the personal tax rate on other income is 41%. How much is left for you after all taxes are paid? The amount that remains is $___per share. (Round to the nearest cent.)
Consider a company with the following capital structure and subject to a company tax rate of 30%: Market Value Market Yield (before-tax) Ordinary shares $2,000,000 16% Preference shares $1,000,000 15% Bonds $2,000,000 12% Calculate the after-tax weighted average cost of capital for the company Explain why the market yields for ordinary shares and preference shares do not need to be adjusted for taxation
Sully Windows earns $5.50 per share before taxes. The corporate tax rate is 40%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 40%. What is the total amount of taxes paid per share if the company pays a $2.00 dividend but all of the shares are held in a tax-free savings account? Be sure to segregate corporate taxes and personal taxes paid.
A firm is making a payment of $1000 to its investors. The firm is in the 35% marginal tax bracket. If this payment is made in the form of dividends to its shareholders, how much does the firm have to have in earnings to be able to make the payment? Round your answer to the nearest dollar. Group of answer choices None of them 1,444 1,350 1,538
You are a shareholder in a C corporation. The corporation earns $2.13 per share before taxes. Once it has paid taxes, it will distribute the rest of its earnings to you as a dividend. The corporate tax rate is 25%, and your personal tax rate on (both dividend and non-dividend) income is 20%. How much is left for you after all taxes are paid?
You are a shareholder in a "S" corporation. This corporation earns $4 per share before taxes. After it has paid taxes, it will distribute the remainder of its earnings to you as a dividend. The dividend is income to you, so you will then pay taxes on these earnings. The corporate tax rate is 21% and your tax rate on dividend income is 15%. The effective tax rate on your share of the corporations' earnings is closest to: WHEELSTE • 15% O 21% О 28% O 33% • 36%
An all equity corporation has net income of $63,313and a required rate of return of 0.14%. What would the value of this firm be if it borrowed $141,848 to buy back some of its stock? Assume a corporate tax rate of 0.45%.