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25 November, 18:59

A C corporation earns $4.50 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 $2.00 dividend? A) $2.48

B) $1.98

C) $0.90

D) $1.58

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  1. 25 November, 20:18
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    B) $1.98

    Explanation:

    Corporate tax = $4.50*35%

    = $1.575

    Personal tax = $2.00*20%

    = $0.40.

    Total amount of taxes = Corporate tax + Personal tax

    = $1.575 + $0.40

    = $1.98

    Therefore, The total amount of taxes paid if the company pays a $2.00 dividend is $1.98
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