This Question: 1 pt 4 of 22 (2 complete) This Test: 22 pts possible ValantCorp i

Question

This Question: 1 pt 4 of 22 (2 complete) This Test: 22 pts possible ValantCorp is a C corporation that earned $3.10 per share before it paid any taxes. ValiantCorp retained $1 of after tax eamings for reinvestment, and distrbuted what remained in dividend payments. If the corporate tax rate was 35% after tax by a holder of 100,000 shares of ValiantCorp? and dividend earnings were taxed at 125%, what was the value of the dividend earnings received O A. $88,813 O B. $124,338 O C. $106,575 O D. $71,050

Explanation / Answer

CALCULATION OF DIVIDEND EARNINGS RECEIVED OF VARIANT CORP Earning available on 100,000 Shares (100,000 Shares X $ 3.10 Per shares) $                3,10,000 Less: Taxation @ 35% $                1,08,500 Net Balance Available for Valiant Corp after tax $                2,01,500 Less: Retained Earning $ 1 per shares $                1,00,000 Net distribuatble dividend $                1,01,500 Less: Dividend Earning Tax @ 12.5% = $                    12,688 Net Dividend earning = $                    88,813 Answer = Option A = $ 88,813

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