Question $5$

pts

Multiple Choice: Problems

New Business is just being formed by $10$ investors, each of whom will own $10\%$ of the business. The firm is expected to earn $$1,500,000$ before taxes each year. The corporate tax rate is $34\%$ and the personal tax rate for the firm's investors is $35\%.$ The firm does not need to retain any earnings, so all of its after$-$tax income will be paid out as dividends to its investors. The investors will have to pay personal taxes on whatever they receive. How much additional spendable income will each investor have if the business is organized as a partnership rather than as a corporation?

$$34,476$

$$38,123$

$$29,172$

$$33,150$

$$26,520$