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Consider a C corporation. The corporation earns $3.5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 100% of its earnings to its shareholders as a dividend. The corporate tax rate is 35%, the tax rate on dividend income is 15%, and the personal income tax rate is set at 39.6%.
1. What are the shareholder's earnings from the corporation after all corresponding taxes are paid?
2. How much is the total effective tax rate on the corporation earnings?
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What is a measure of the sensitivity of a stock or portfolio to market risk?
Frantic Fast Foods had earnings after taxes of $420,000 in 2012 with 309,000 shares outstanding. On January 1, 2013, the firm issued 20,000 new shares. Because of the proceeds from these new shares and other operating improvements, earings after taxe..
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