What is the effective tax rate paid

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Reference no: EM131497168

You are a shareholder in J&J, Inc., a C corporation that has income before taxes of $4 million. Once the firm has paid taxes, it will distribute the rest of its earnings to its shareholders as a dividend. There are 1 million shares outstanding. Assume the corporate tax rate is 34%, and the personal tax rate on dividend income is 20%.

A. As a shareholder with 100 shares, how much will you receive after all taxes are paid?

B. What is the effective tax rate paid by J&J, Inc. shareholders?

Reference no: EM131497168

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