An Scorporation earns $7.20 per share before taxes. The corporate tax rate is 39%, the personal...

Question

Question

Answer 1

Answer #1

Correct Option - B) $2.59

Explanation:

For S corporation:

Earnings Per Share = $7.20

Personal Tax rate on Non-Dividend Income = 36%

Therefore, total amount of tax paid will be

Tax Amount = Earnings Per Share * Non-Dividend Income Tax Rate

= $7.20 * 36%

= $7.20 * 0.36

= $2.592

= $2.59 [rounded off to two deciaml places]

Answer 2

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