Susan owns all the debt and equity that is issued by Pinder Ltd. Pinder Ltd has an EBIT of $540,207. Of that EBIT, Pinder Ltd pays interest expenses of $183,498 and distributes all net income as dividends. The corporate tax rate is 33%, and Susan's personal income tax rate is 45%, applicable to both dividend and interest income. Susan currently lives under the classical tax system. Based only on the information above, how much more after-tax income would Susan have earned from interest and dividends under an imputation tax system? (round to the nearest two decimal places) a) None of the other answers. b) $64,742.68 c) $63,741.71 d) $63,242.47 e) $64,242.34
Susan owns all the debt and equity that is issued by Pinder Ltd. Pinder Ltd has an EBIT of $540,207. Of that EBIT, Pinder Ltd pays interest expenses of $183,498 and distributes all net income as dividends. The corporate tax rate is 33%, and Susan's personal income tax rate is 45%, applicable to both dividend and interest income. Susan currently lives under the classical tax system. Based only on the information above, how much more after-tax income would Susan have earned from interest and dividends under an imputation tax system? (round to the nearest two decimal places) a) None of the other answers. b) $64,742.68 c) $63,741.71 d) $63,242.47 e) $64,242.34
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Susan owns all the debt and equity that is
issued by Pinder Ltd. Pinder Ltd has an EBIT
of $540,207. Of that EBIT, Pinder Ltd pays
interest expenses of $183,498 and
distributes all net income as dividends. The
corporate tax rate is 33%, and Susan's
personal income tax rate is 45%, applicable
to both dividend and interest income.
Susan currently lives under the classical tax
system. Based only on the information
above, how much more after-tax income
would Susan have earned from interest and
dividends under an imputation tax system?
(round to the nearest two decimal places)
a) None of the other answers.
b) $64,742.68
c) $63,741.71
d) $63,242.47
e) $64,242.34
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