Which of the Following Is Correct Regarding the Payment of Dividends

question 62

Multiple Choice

Which of the following is correct regarding the payment of dividends by a corporation?

• A)that it Dividends are tax deductible by the corporation once they have been declared.
• B)Dividends are paid out of net after-tax income and thus are tax deductible by the corporation in the following tax year.
• C)They Dividends are paid out of net after-tax income and thus are not tax deductible by the corporation.
• D)If dividends are paid after-tax bond interest they are tax deductible by the corporation.

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Definitions:

Number of Periods

A figure representing the count of time intervals, such as months or years, in various financial calculations.

Compounded Annually

Refers to the process whereby the interest earned on an investment is added to the principal at the end of each year, and the following year's interest calculation includes the added interest from the previous year.

Annual Interest Rate

The percentage of principal charged by the lender for the use of its money expressed as an annual rate.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan balance.