What the capital gains tax rate

Assignment Help Cost Accounting
Reference no: EM132711718

Problem 1: Assume a Modigliani and Miller (MM) world with taxes. Food Feast Ltd (FF) has €300 million in excess cash. FF can distribute this excess cash as a special dividend. Alternatively, FF can retain this excess cash permanently and invest it in government bonds earning a 1.5% annual return. FF pays a corporate tax rate of 25%. FF's shareholders pay both capital gains and income taxes; their income tax rate is 50%. The capital gains tax rate at which FF's shareholders are indifferent between the dividend payment and the cash retention is closest to:

A) 75%

B) 25%

C) 33%

D) 37.5%

Reference no: EM132711718

Questions Cloud

What information is relevant to the process : What is incremental analysis, and what information is relevant to the process? List the 5 types of incremental analysis situations, and provide an example
Differences in emission spectra of different elements : 1. What are some differences in the emission spectra of the different elements?
What is the equilibrium constant : Ethane (C2H6)is in equilibrium with ethylene (C2H4) and hydrogen (H2) at 1400k. Assume that the activity (concentration, partial pressure) of all the gases are
Explain the data analytics and visualization : Project assignment is to have you do more research on the topic of Data Analytics and Visualization. In this project you will need to do some research.
What the capital gains tax rate : What the capital gains tax rate at which FF's shareholders are indifferent between the dividend payment and the cash retention is closest to
What is the x-axis interception : What is the x-axis interception? What it standing for? What is the expected value of it?
What price should she charge to break even : To process the pictures, she estimates that she would have supplies expenses of $4 per picture. What price should she charge to break even
What are the steps involved in contemporary style of design : What are the steps involved in contemporary style of design and development of organisational learning strategy? Answer in 200-250 words
Find the frequency of an electromagnetic wave : Find the frequency of an electromagnetic wave with the wavelength of 2.9 X 10-4 meters. What major type of electromagnetic radiation would this be?

Reviews

Write a Review

Cost Accounting Questions & Answers

  Cost accounting assignment

Evaluate Method of measuring costs associated with production, budgeting process, normal job-order costing system , master budget, cycle time.

  Prepare the journal entries

Prepare the journal entries to record the bond issue and interest expense.

  Advise as to the liability of all the parties

Write a report on given case study and Advise as to the liability of ALL the parties both under common law and the Corporations Law.

  Prepare revenues budget

Prepare Revenues budget and Production budget in units

  Effect of exchange rate changes on cash and cash

Effect of exchange rate changes on cash and cash

  Corporate governance

You are to reflect on how this case of China Sky relates to what the arguments for and against allowing audit firm partners and/or employees to join audit committees.

  Cost-benefit analysis

A cost-benefit analysis of electronic medical records in primary care

  Non-annual interest rates and annuities

Theory of Interest- Non-annual interest rates and annuities

  Job costing in service organizations

How is job costing in service organizations different from job costing in manufacturing environments?

  Accounting for bad debt expense

Accounting for bad debt expense

  Accounting and partnership problems

Accounting and Partnership problems

  Development of relevant cash flows

Development of relevant cash flows - Cost estimating and financial analysis

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd