Financial Accounting 1 5 Marks Financial AccountingYour corporation has a marginal tax rate of 35% and has purchased preferredstock in another company. The before-tax dividend yield on the preferred stock is12%. What is the company's after-tax return on the preferred, assuming a 70%dividend exclusion

Concept of Marginal Tax RateThe marginal tax rate refers to the percentage of tax applied to the…

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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 1P

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The Castle Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company’s stock currently trades at $60 per share. Compute the stock’s earnings per share (EPS). What is the stock’s P/E ratio? Determine what the stock’s dividend yield would be if it paid $1.75 per share to common stockholders.
Albion Inc. provided the following information for its most recent year of operations. The tax rate is 40%. Required: 1. Compute the following: (a) return on sales, (b) return on assets, (c) return on stockholders equity, (d) earnings per share, (e) price-earnings ratio, (f) dividend yield, and (g) dividend payout ratio. 2. CONCEPTUAL CONNECTION If you were considering purchasing stock in Albion, which of the above ratios would be of most interest to you? Explain.
Ratio Analysis MJO Inc. has the following stockholders equity section of the balance sheet: On the balance sheet date, MJOs stock was selling for S25 per share. Required: Assuming MJOs dividend yield is 1%, what are the dividends per common share? Assuming MJOs dividend yield is 1% and its dividend payout is 20%, what is MJOs net income?
Please provide answer the accounting question
___ is the after tax return?
Interest versus dividend expense Michaels Corporation expects earnings before interest and taxes to be $43,000 for the current period. Assuming a flat ordinary tax rate of 21%, compute the firm's earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions: a. The firm pays $12,100 in interest. b. The firm pays $12,100 in preferred stock dividends. a. Complete the fragment of Michaels Corporation's income statement below to compute the firm's earnings after taxes and earnings available for common stockholders under condition (a). (Round to the nearest dollar.) EBIT Less: Interest expense Earnings before taxes Less: Taxes (21%) Earnings after taxes Less: Preferred dividends Earnings available for common stockholders $ LA $ $ $
Interest versus dividend expense Michaels Corporation expects earnings before interest and taxes to be $48,000 for the current period. Assuming a flat ordinary tax rate of 27%, compute the firm's earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions: a. The firm pays $13,000 in interest. b. The firm pays $13,000 in preferred stock dividends. a. Complete the fragment of Michaels Corporation's income statement below to compute the firm's earnings after taxes and earnings available for common stockholders under condition (a) (Round to the nearest dollar) EBIT $ Less: Interest expense Earnings before taxes $ Less: Taxes (27%) Earnings after taxes $ Less: Preferred dividends Earnings available for common stockholders
A $60 par value preferred stock has a stated dividend of 6%, with a market price of $70. The company plans on raising cash in the market by selling more of the same preferred stock and investment bankers charge the company a 5% fee for selling it. The company’s stated tax rate is 25%. A. Calculate the before-tax cost of preferred stock to the company. B. Calculate the cost of preferred stock to the company after taxes.
Interest versus dividend expense Michaels Corporation expects earnings before interest and taxes to be $49,000 for the current period. Assuming a flat ordinary tax rate of 21%, compute the firm's earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions: a. The firm pays $11,500 in interest b. The firm pays $11,500 in preferred stock dividends a. Complete the fragment of Michaels Corporation's income statement below to compute the firm's earnings after taxes and earnings available for common stockholders under condition (a) (Round to the nearest dollar)
The shares of ABC Ltd have a market price of $4 and an annual dividend of 17.5 cents per share fully franked at the tax rate of 30 per cent. Calculate the dividend yield after company tax but before personal tax a. 16% b. 2.56% c. 6.25% d. It cannot be calculated as not enough information is provided
What is the after-tax cost of preferred stock that pays a $12 dividend and sells at $100 if the firm's tax rate is 21%? 8.5% 12.0% 16.2% 7.8%
5. Firm A's share price drops by 60% of the dividend amount on the ex-dividend date. If the rate of capital gains tax is 1/3 of the personal tax rate, what is the implied personal tax rate of Firm A's marginal shareholders? O O 10 % 25 % 33.3 % 50 % 60 %

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5 Marks Financial Accounting Your corporation has a marginal tax rate of 35% and has purchased preferred stock in another company. The before-tax dividend yield on the preferred stock is 12%. What is the company's after-tax return on the preferred, assuming a 70% dividend exclusion