Principles of Managerial Finance, Student Value Edition Plus NEW MyLab Finance with Pearson eText -- Access Card Package (14th Edition)
Principles of Managerial Finance, Student Value Edition Plus NEW MyLab Finance with Pearson eText -- Access Card Package (14th Edition)
14th Edition
ISBN: 9780133740912
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Chapter 14.2, Problem 14.5RQ
Summary Introduction

To discuss: The effects of jobs and growth tax relief reconciliation act of 2003 on taxation of corporate dividend.

Introduction:

The jobs and growth tax relief reconciliation act is an investment tax which was formed in the year 2003.

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Students have asked these similar questions
How would an increase in corporate taxes tend to affect an average firm’s capitalstructure? What about an increase in the personal tax rate?
What is the relative tax advantage of corporate debt if the corporate tax rate Tc = 21%, thepersonal tax rate Tp = 37%, but all equity income is received as capital gains and escapestax entirely (TpE = 0%)? How does the relative tax advantage change if the companydecides to pau out all equity income as cash dividends that are taxed at 20%?
If instead of issuing a cash dividend a company instead issues a stock dividend, what is the impact to the shareholders? Do they need to report anything that year on their tax return for the dividend and why might a shareholder like getting a stock dividend instead of cash?

Chapter 14 Solutions

Principles of Managerial Finance, Student Value Edition Plus NEW MyLab Finance with Pearson eText -- Access Card Package (14th Edition)

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Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY