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How much will her investment be worth

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Question - Hayley recently invested $20,000 in a public utility stock paying a 6 percent annual dividend. (Hayley's marginal income tax rate is 32 percent and preferential tax rate is 15 percent.) Use Tax Rate Schedule, Dividends and Capital Gains Tax Rates for reference.

Required -

1. If Hayley reinvests the annual dividend she receives net of any taxes owed on the dividend, how much will her investment be worth in five years if the dividends paid are qualified dividends?

2. What will her investment be worth in five years if the dividends are nonqualified?

Reference no: EM132549708

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