A C corporation earns $4.30 per share before taxes. The corporate tax rate is 35%, the...

A C corporation earns $4.30 per share before taxes. The corporate tax rate is 35%, the personal tax rate on dividends is 20%, and the personal tax rate on non-dividend income is 39%. What is the total amount of taxes paid if the company pays a $3.00 dividend?

Expert Solution

Ans :

Corporate tax = Earnings before tax * corporate tax rate

= $ 4.3 * 35 %

= $ 1.505

Person tax on dividend = $ 3 * 20%

= $ 0.6

Total tax = $ 1.505 + 0.6

= $ 2.105

jeff jeffy answered 2 years ago

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