You are a consultant that has been hired to recommend a payout policy for UBT Corp....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are a consultant that has been hired to recommend a payout policy for UBT Corp. UBT's shareholders are almost exclusively pension funds and other corporations. No shareholder of UBT owns more than 20% of all outstanding shares. You have compiled a table with the current tax rates that different types of investors might face (see below). With the information provided, how would you recommend that UBT structure its payout policy? Assume that taxes are the only market imperfection. Investor Type Buy and hold individual investor Tax Rate on Dividends Tax Rate on Capital Gains 20% 0% 20% 0% One-year individual investor 20% Pension fund 0% Corporation with less than 20% ownership 10.5% 21% You are a consultant that has been hired to recommend a payout policy for UBT Corp. UBT's shareholders are almost exclusively pension funds and other corporations. No shareholder of UBT owns more than 20% of all outstanding shares. You have compiled a table with the current tax rates that different types of investors might face (see below). With the information provided, how would you recommend that UBT structure its payout policy? Assume that taxes are the only market imperfection. Investor Type Buy and hold individual investor Tax Rate on Dividends Tax Rate on Capital Gains 20% 0% 20% 0% One-year individual investor 20% Pension fund 0% Corporation with less than 20% ownership 10.5% 21%
Expert Answer:
Answer rating: 100% (QA)
Based on the tax rates provided for different types of investors the recommendation for UBT Corps pa... View the full answer
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
Students also viewed these finance questions
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Silverago Incorporated, an international metals company, reported a loss on the sale of equipment of $2 million in 2010. In addition, the companys income statement shows depreciation expense of $8...
-
Five separate force-couple systems act at the corners of a metal block, which has been machined into the shape shown. Determine which of these systems is equivalent to a force F = (2 lb)j and a...
-
Analyzing revenue transactions Examine the following transactions and identify those that create revenues for Valdez Services, a company owned by Brina Valdez. Use debit-credit rules to record the...
-
For the following observed and expected frequencies: a. Compute the value of X2. b. How many degrees of freedom are there? c. Test the hypothesis that the distribution of the observed frequencies is...
-
Jake Tweet hosts a psychology talk show on KRAN radio. Jakes advice averages 10 minutes per caller but varies according to an exponential distribution. The average time between calls is 25 minutes,...
-
A generator for a number of coils, N, the open circuit voltage is VOC=40 VN, and short circuit current is Isc=4000 A/N. a. What is the Thevenin eq of the generator, in terms of N?: Rth, and Vth b....
-
Segment the wind-generated power industry in a way that shows where Windspire Energy, the subject of the You Be the VC 1.1 feature, is located in the industry. How does Windspires awareness of the...
-
2 To show that lognormal price dynamics is the continuum limit of a family of binomial trees, we considered the following multiperiod multiplicative tree: the stock price at the initial node is...
-
graph the hyperbola. Find the center, the lines which contain the transverse and conjugate axes, the vertices, the foci and the equations of the asymptotes. x2 y 1. = 1 16 9
-
Suppose a public referendum is being held on whether or not to levy a tax on cigarettes. Currently, the supply of cigarettes is given by Qs = -80 + 30P. You estimate the demand for cigarettes to be...
-
A tennis ball follows a path described by the function h(d) 144(d-12)+2, where h is the height of the ball above the court and d is the horizontal distance of the ball from the tennis player, both in...
-
You can download the MATLAB file here : http://www.columbia.edu/~mu2166/closing.htmThank you . 4.6 (An AR(2) TFP Process and Excess Consumption Volatility) In this exercise you are asked to show that...
-
Write the equation of the line tangent to f(x)= 1 when x = 1.
-
Explain what requirements this ER diagram is implementing 2- Draw an ER diagram (relationships) for the following business rules in a company: A salesperson manages one or many other salespeople...
-
Let X be a random variable taking on values a1, a2, . . . , pr with probabilities p1, p2, . . . , pr and with E(X) = μ. Define the spread of X as follows: This, like the standard deviation, is a...
-
Explain the use of budgetary accounting and encumbrances by NFPOs.
-
When will the premium paid on a forward contract to hedge a firm commitment to purchase inventory be reported in income under a cash flow hedge? Explain.
-
On July 1, Year 4, Aaron Co. purchased 80% of the voting shares of Bondi Ltd. For $543,840. The statement of financial position of Bondi on that date follows. The accounts receivable of Bondi were...
-
Describe one occasion where you have been influenced to buy a product or engage in an activity as a direct result of an item of corporate communication, eg social media update; and explain what that...
-
What are the elements of a master budget?
-
Discuss the potential conflict between using a budget as a motivational device and as a means of control.
Study smarter with the SolutionInn App