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A corp is considering paying dividends to shareholders.The corp has a $2.00 of per share earnings...

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Finance

A corp is considering paying dividends to shareholders.The corphas a $2.00 of per share earnings before taxes. Corp tax rate is21%, personal dividend income tax rate is 15%, personalnon-dividend income tax is 25% What is the after-tax value thatwill accure to shareholders if all $2.00 is distributed and thecorp is a C-corp. What is the after tax value that would accure toshareholders, but now assume it is an S-corp.

Please show work and some small explanations would be nice, ineed to be able to know how to do this myself thanks!

Answer & Explanation Solved by verified expert
4.5 Ratings (783 Votes)
C Corp S Corp EBTEPSBefore Taxes 200 200 Corporate Tax at 21 042 0 Net Income 158 200 Dividends distributed 158 Profits distributed 2 LessPersonal tax for dividends 15158 0237 LessPersonal tax for nondividends 25200 05 After tax value    See Answer
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