Assume that the personal tax rate on interest income is 15% and the personal tax rate on dividends is 10%. Assume also that the Company generates EBIT equal to 5 euros and distributes 40% of these earnings (payout ratio = 40%) to its shareholders. What is the net income that the shareholder receives after taxes? Coporate tax =22% a) 3.51 b) 1.40 c) 1.78 d) None of the above.

Assume that the personal tax rate on interest income is 15% and the personal tax rate on dividends is 10%. Assume also that the Company generates EBIT equal to 5 euros and distributes 40% of these earnings (payout ratio = 40%) to its shareholders. What is the net income that the shareholder receives after taxes? Coporate tax =22% a) 3.51 b) 1.40 c) 1.78 d) None of the above.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 8QE

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