Chapter 17.3

The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Expected Dividend $0 Expected Capital Gain $10 Stock 10 a. If each stock is priced at $100, what are the expected net percentage returns on each stock to () a pension fund that does not pay taxes, (ii) a corporation paying tax at 35% (the effective tax rate on dividends received by corporations is 10.5%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Stock Pension Investor Corporation Individual