Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 16, Problem 10PS
Payout and taxes* Which of the following U.S. investors have tax reasons to prefer companies that pay out cash by repurchases instead of cash dividends? Which should not care?
- a. A pension fund.
- b. An individual investor in the top income-tax bracket.
- c. A corporation.
- d. An endowment for a charity or university.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
3. Do the wealthiest corporations receive a tax break in terms of a lower tax rate? Explain.
4. What is the cash flow identity? Explain what it says.
In countries which has low rate of tax collection, what will be its effect on business/entrepreneurs.
What tax treatment do individual investors generally prefer in stock redemptions? Why?
Chapter 16 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 16 - Prob. 1PSCh. 16 - Company dividend policy Here are several facts...Ch. 16 - Dividend payments Seashore Salt Co. has surplus...Ch. 16 - Repurchases Look again at Problem 3. Assume...Ch. 16 - Payout policy in perfect capital markets Go back...Ch. 16 - Dividends and stock price Go back to the first...Ch. 16 - Prob. 7PSCh. 16 - Repurchases and the DCF model Surf Turf Hotels is...Ch. 16 - Prob. 9PSCh. 16 - Payout and taxes Which of the following U.S....
Ch. 16 - Prob. 11PSCh. 16 - Prob. 13PSCh. 16 - Information content of dividends What is meant by...Ch. 16 - Information content of dividends Does the good...Ch. 16 - Prob. 16PSCh. 16 - Repurchases and the DCF model Little Oil has 1...Ch. 16 - Dividends and value We stated in Section 16-3 that...Ch. 16 - Prob. 19PSCh. 16 - Repurchases and the DCF model House of Haddock has...Ch. 16 - Prob. 21PSCh. 16 - Prob. 22PSCh. 16 - Repurchases and the DCF model Hors dAge...Ch. 16 - Repurchases An article on stock repurchase in the...Ch. 16 - Prob. 25PSCh. 16 - Information content of dividends Generous dividend...Ch. 16 - Repurchases and EPS Many companies use stock...Ch. 16 - Prob. 28PSCh. 16 - Dividend policy and the dividend discount model...Ch. 16 - Prob. 30PS
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Why income tax is higher than corporate tax around the world?arrow_forwardAssume that the tax on dividends and the tax on capital gains is the same. All else equal, what would a prudent investor prefer? A. More information is needed. B. The prudent investor would prefer dividends—a dollar today is always worth more than a dollar to be received in the future. C. The prudent investor would be indifferent between receiving dividends or capital gains. D. The prudent investor would prefer capital gains—the capital gain tax liability can be deferred until gains are realized.arrow_forwardF3arrow_forward
- Discuss problems about “Income tax rate is too high” in a country? What solutions can be done to solve it?arrow_forwardWhy is the personal income tax considered less stable than a consumption tax and how do U.S. corporate income taxes favor debt financing over equity financing for business expansion? In addition to this, what are the common criticisms of California’s Proposition 13?arrow_forwardhow is the US income tax system unique? Do you think it is good for tax payers?arrow_forward
- Discuss the reasons why individuals generally prefer capital gains over ordinary gains. Explain why corporate taxpayers might prefer capital gains over ordinary gains.arrow_forwardIf Congress wants to stimulate the economy, explainhow it might alter each of the following: (a) personaland corporate tax rates, (b) depreciation expenseschedules, and (c) the differential between the taxrate on personal income and long-term capitalgains. How would these changes affect corporateprofitability and free cash flow? How would theyaffect investors’ choices regarding which securities to hold in their portfolios? Might any of theseactions affect the general level of interest rates?arrow_forwardWhich of the following would be a good question to ask before advising a client to move from a Schedule C to S corporation tax treatment? Review Later How does moving to S corp tax treatment impact the ability to pump tons of money into a tax-deferred retirement plan? What really are the net savings, after accounting for all the extra fees attached to operating an S corporation? Is this client likely to actually do the compliance stuff associated with operating an S corporation, or is the "extra red tape" possibly (read: probably) going to become a nightmare for the client?.arrow_forward
- 4arrow_forwardFederal income taxes have a significant effect on businesses and investors, and affect the personal decisions of every taxpayer in the United States. If we consider that the tax rates of corporations and individuals can reach up to 37% of contributions, certainly, all transactions have their tax impact. Argument about Internal Revenue Services of USA. Do you think the tax filing requirements that the IRS demands of taxpayers is fair? Why?arrow_forwardDiscuss problems regarding tax evasion in a country? What should be the solution that can be done by the government?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Dividend explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=Wy7R-Gqfb6c;License: Standard Youtube License