Saskatoon Smelting Is a Corporation That Earned $4 Per Share

question 1

Multiple Choice

Saskatoon Smelting is a corporation that earned $4 per share before it paid any taxes.The firm retained $2 of after-tax earnings for reinvestment,and distributed what remained in dividend payments.If the corporate tax rate was 25% and dividend earnings were taxed at 15%,what was the value of the dividend earnings received after tax by a holder of 10,000 shares of Saskatoon Smelting?

• A)$7,500
• B)$17,000
• C)$8,500
• D)$10,000
• E)$20,000

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Definitions:

Novation

A mutual agreement, between all parties concerned, for the discharge of a valid existing obligation by the substitution of a new valid obligation on the part of the debtor or another, or a like agreement for the discharge of a debtor to his creditor by the substitution of a new creditor.

Delegator

A person or entity that assigns tasks or duties to another party (the delegatee) while maintaining ultimate responsibility.

Obligation

A duty or commitment requiring an individual or entity to act in a certain way, often legally binding.

Duress

A situation where a person is compelled to perform an act or enter into a contract under threat of violence, harm, or undue pressure.