You are a shareholder in Silver crest Technologies, a "C" corporation. The corporation earns $6 per share before taxes. After paying corporate taxes, the company will distribute the remainder of its earnings to you as a dividend. The corporate tax rate is 28%, and your tax rate on dividend income is 20%. What is the effective tax rate on your share of the corporation's earnings?

You are a shareholder in Silver crest Technologies, a "C" corporation. The corporation earns $6 per share before taxes. After paying corporate taxes, the company will distribute the remainder of its earnings to you as a dividend. The corporate tax rate is 28%, and your tax rate on dividend income is 20%. What is the effective tax rate on your share of the corporation's earnings?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 8P

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