1. ) Suppose you own 1,000 shares in a C corporation. The corporation earns $2 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. Assume...

1. )
Suppose you own 1,000 shares in a C corporation. The corporation earns $2 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend. Assume the corporate tax rate is 40% and the personal tax rate on both dividend and non-dividend income is 30%.

a. What is your (total) after tax income?

b. What is your effective tax rate?

Repeat steps a and b under the assumption that the firm is an S corporation