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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%
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Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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