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  3. assume that the following tax rates apply: corpora

Assume that the following tax rates apply: Corporate Income Tax = 20%; Personal Income Tax...

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Accounting

Assume that the following tax rates apply:

Corporate Income Tax = 20%; Personal Income Tax = 25%; Dividend Income Tax = 12%. The companys Earnings before interests and taxes (EBIT) is $500.

What would be the aftertax return for:

  1. Equity holders in an all-equity company (given 100% dividend pay-out)
  2. Debt holders of the company paying $500 interest to them

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