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15. Vodacom SA has a dividend payout ratio of 70%. The personal tax rate on dividend income is 20 %, and the personal tax rate on capital gains is 11%. TC= (Corporate tax rate) = 28%; and TP= Personal tax rate on interest income = 22%: Calculate the relative tax advantage of debt with personal and corporate taxes. a. 1.31 b. 1.28 c. 0.78 d. 0.60 e. 0.17

15. Vodacom SA has a dividend payout ratio of 70%. The personal tax rate on dividend income is 20 %, and the personal tax rate on capital gains is 11%. TC= (Corporate tax rate) = 28%; and TP= Personal tax rate on interest income = 22%: Calculate the relative tax advantage of debt with personal and corporate taxes. a. 1.31 b. 1.28 c. 0.78 d. 0.60 e. 0.17

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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15. Vodacom SA has a dividend payout ratio of 70%. The personal tax rate on dividend income is 20 %, and the personal tax rate on capital gains is 11%. TC= (Corporate tax rate) = 28%; and TP= Personal tax rate on interest income = 22%: Calculate the relative tax advantage of debt with personal and corporate taxes. a. 1.31 b. 1.28 c. 0.78 d. 0.60 e. 0.17
Transcribed Image Text:15. Vodacom SA has a dividend payout ratio of 70%. The personal tax rate on dividend income is 20 %, and the personal tax rate on capital gains is 11%. TC= (Corporate tax rate) = 28%; and TP= Personal tax rate on interest income = 22%: Calculate the relative tax advantage of debt with personal and corporate taxes. a. 1.31 b. 1.28 c. 0.78 d. 0.60 e. 0.17
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