Homework Answers
Number of shares = 100
Stock price (2 years ago) = $107.66
YEAR 1
Dividend per share = $1.10
Total Dividend = $1.10 x 100 = $110
Tax on dividend = 28% of $110 = $30.8
Capital Gain : There is no sale of shares and hence there is no capital gain.
YEAR 2
Dividend per share = $1.21
Total Dividend = $1.21 x 100 = $121
Tax on dividend = 28% of $121 = $33.88
Stock price = $117.93
Capital Gain per share = $117.93 - $107.66 = $10.27
Total capital gain = 100 x $10.27 = $1027
Tax on capital gain = 28% of $1027 = $287.56
| Calculating Taxes Owned on Albert's Investment | |||
| Amount | Taxes Owed | ||
| Year 1 | Dividends | $110 | $30.8 |
| Capital Gains | 0 | 0 | |
| Year 2 | Dividends | $121 | $33.88 |
| Capital Gains | $1027 | $287.56 | |
The total amount of income(pre taxes) earned in 2 years = $110 + $121 + $1027 = $1258
Total amount of tax paid = $30.8 + $33.88 + $287.56 = $352.24
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