Little Pear is subject to a company tax rate of 30%. The company asks you to assess
Question:
Little Pear is subject to a company tax rate of 30%. The company asks you to assess and calculate the after-tax (where relevant) cost of each of the following sources of funds:
a. Ordinary $1 shares expect the next dividend payment to be $0.102 per share, which is expected to grow at a rate of 2% in perpetuity. The current market price is $1.20.
b. What is the cost of $100,000 in retained earnings?
c. 10% preference shares of $2 with a current market price of $2.50.
d. 9% debentures with an issued value of $100, redeemable in four years at $100 with a current market price of $90.90.
Q2. List 4 complex taxation issues a business should escalate to a tax agent or accounting firm.
Managerial Accounting Decision Making and Motivating Performance
ISBN: 978-0137024872
1st edition
Authors: Srikant M. Datar, Madhav V. Rajan