How would each of the following changes tend to affect the average dividend payout ratios for corporations, other things held constant? Explain your answers. a. An increase in the personal income tax rate b. A liberalization of depredation for federal income tax purposes—that is, faster tax write-offs c. A rise in interest rates d. An increase in corporate profits e. A decline in corporate investment opportunities f. Permission for corporations to deduct dividends for tax purposes as they now can do with interest charges g. A change in the tax code so that both realized and unrealized capital gains in any year were taxed at the same rate as dividends
How would each of the following changes tend to affect the average dividend payout ratios for corporations, other things held constant? Explain your answers. a. An increase in the personal income tax rate b. A liberalization of depredation for federal income tax purposes—that is, faster tax write-offs c. A rise in interest rates d. An increase in corporate profits e. A decline in corporate investment opportunities f. Permission for corporations to deduct dividends for tax purposes as they now can do with interest charges g. A change in the tax code so that both realized and unrealized capital gains in any year were taxed at the same rate as dividends
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter15: Distributions To Shareholders: Dividends And Repurchases
Section: Chapter Questions
Problem 2Q: How would each of the following changes tend to affect aggregate payout ratios (that is, the average...
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How would each of the following changes tend to affect the average dividend payout ratios for corporations, other things held constant? Explain your answers.
a. An increase in the personal income tax rate
b. A liberalization of depredation for federal income tax purposes—that is, faster tax write-offs
c. A rise in interest rates d. An increase in corporate profits
e. A decline in corporate investment opportunities
f. Permission for corporations to deduct dividends for tax purposes as they now can do with interest charges
g. A change in the tax code so that both realized and unrealized capital gains in any year were taxed at the same rate as dividends
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