Question: Using the facts in Exercise 1, assume that Companies X and Y have identical dividend payout ratios of 50 percent. Country Z, your country of

Using the facts in Exercise 1, assume that Companies X and Y have identical payout ratios of 50 percent. Country Z, your country of domicile, has an income tax rate of 35 percent. Country Z has a tax treaty with countries X and Y so that no withholding taxes are assessed on dividends received. Furthermore, Country Z grants a tax credit for any direct foreign taxes paid.
Required:
Show which company now promises the better after-tax investment performance, and why.

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