Answer:
At a corporate tax rate of 16.29%, both investment shall have same income, so it will be the indifference point.
Explanation:
Let take X to be the corporate tax rate
Note that 70% dividend exclusion for tax on dividend mean 30% is actually applied to dividend
Preferred dividend = 5000 * 7.75% = 387.5
Taxable dividend = 387.5 * 30% = 116.25
Interest on bond = 5000*10% = 500
For the purpose of Indifference of the two investment brought about by the two break-even corporate tax
387.5 - 116.25 * X = 500 - 500*X
500 X - 116.25 X = 500 - 387.5
383.75 X = 175
-112.5
383.75 X = 62.5
X= 62.5/383.75
X= 0.1629
X=16.29%
At a corporate tax rate of 16.29%, both investment shall have same income, so it will be the indifference point.
Answer:
The Rex’s gross income from the partnership in 2019 and 2020 is $1,20,000 and $1,80,000 respectively
Explanation:
The computation of the gross income for each year is shown below:
In 2019:
Gross income = Taxable income × percentage of interest in profits
= $400,000 × 30%
= $1,20,000
In 2020:
Gross income = Taxable income × percentage of interest in profits
= $600,000 × 30%
= $1,80,000
The withdrawn amount is not consider for computing the gross income. So, we ignored it
The monopolist decision process involves a three-step process:1. The monopolist will select a quantity which maximizes profit.2. The monopolist will decide on what price he would charged.3. The monopolist will determine the total cost, total revenue, and profit.
I think it is C or B or A