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On January​ 1, 2013, an investor bought 300 shares of​ Gottahavit, Inc., for $51 per share....

On January​ 1, 2013, an investor bought 300 shares of​ Gottahavit, Inc., for $51 per share. On January​ 3, 2014, the investor sold the stock for $56 per share. The stock paid a quarterly dividend of ​$0.35 per share. How much​ (in $) did the investor earn on this investment​ and, assuming the investor is in the 33​%tax​ bracket, how much will she pay in income taxes on this​ transaction? Assume a preferential tax rate of​ 15% on dividends and capital gains.

The amount​ (before taxes) the investor earned on this investment is ​$ ____ ​(Round to the nearest​ dollar.)

Assuming a preferential tax rate of​ 15%, the amount she will pay in income taxes on this transaction is ​$ _______.

Solutions

Expert Solution

Earnings on Investment = Capital Gain + Dividend Income

= (56-51)*300 + (0.35*4)*300

= $1,920

The amount (before taxes) the investor earned on this investment is ​$1,920

Assuming a preferential tax rate of​ 15%, the amount she will pay in income taxes on this transaction is ​$1,920*15% = $288

jeff jeffy answered 2 years ago
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