A C corporation earns $ 9.20 per share before taxes and the company pays a dividend of $ 4.00 per share. The corporate tax rate is 39%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 36%. What is the after-tax amount an individual would receive from the dividend?

Question

Business

Phoenix Guerrero

5 January, 17:22

A C corporation earns $ 9.20 per share before taxes and the company pays a dividend of $ 4.00 per share. The corporate tax rate is 39%, the personal tax rate on dividends is 15%, and the personal tax rate on non-dividend income is 36%. What is the after-tax amount an individual would receive from the dividend?

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Answers (1)

Know the Answer?

Krish · Answer 1

The answer is $4.27

Explanation:

Solution

Given that:

AC corporation earns = $9.2 per share

Pays a dividend of = $4.00

The tax rate (Corporate) is = 39%

The tax rate on personal dividends is = 15%

The tax rate for non-dividend personal income is = 36%

Now,

We must find the after tax rate amount of after tax rate an individual or a person would earn from the dividend

Thus,

The corporate tax = $9.40 * 39% = 3.67

Personal tax = $4.00 * 15% = 0.6

Now we find the total for the after tax rate

Total = $3.67 + $0.6

= $4.27

Therefore, the after tax rate an individual or a person would earn from the said divided is $4.27