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  3. 3. gusto cars, inc. has been having a terrible yea

3. Gusto Cars, Inc. has been having a terrible year this year. In the current...

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Accounting

3. Gusto Cars, Inc. has been having a terrible year this year. In the current year, they are scheduled to make only $2.5 million net income, but the heads of the company realize this is primarily due to an accounting change costing them roughly $40 million in income. Sales are going well and the company expects to rebound from this going forward, however, Gusto has held a constant 3.5% payout on its dividend, and without a significant market drop, this means they will have to pay out roughly 7.5 million in dividends. They have an accumulated earnings and profit of $200 million. What will be the tax effect to shareholders assuming the entire dividend is paid out? (10Pts)

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