Use the data inthe table EB to calculate the tax disadvantage of retained cash a

Question

Use the data inthe table EB to calculate the tax disadvantage of retained cash a 1994 in b. 1976 a. 1994 The tax disadvantage of retained cashin 1994 is»% (Round to hodeimal places.) b. 1976 The tax disadvantage of retained cash in 1976 % (Round to two decimal places)nhont Data Table (Click on the icon located on the to-ght comer of the data table below in order to copy its contents -Top Federal lax Rates in the United States rate terestAverae Rate on Dividends Capital Tax Rate 1l IncomeEquity Income 70% 70% 70 70% 50% 39% 20% 31% 40% 40% 39% 35% 1979-1981 46% 35% 33% 198. 1990 34% 1991-1992 11 34% 1991-1996 35% 31% 20% 2001-2002 36% 20032012 35% 35% 15% 15% 15% 30% Print Done Enter your answer in each of the answer boxes

Explanation / Answer

Tax Disadvantage in 1994 1 - ((1-t)*(1-roe)/(1- dividend paid)) 1-((1-0.35)*(1-0.34)/(1-0.40)) 1-((0.65*0.66/0.60)) 0.285 28.50% Tax Disadvantage in 1976 1 - ((1-t)*(1-roe)/(1- dividend paid)) 1-((1-0.46)*(1-0.49)/(1-0.70)) 1-((0.54*0.51/0.30)) 0.082 8.20%

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