Webster Holding Ltd Is a Company Which Owns a Number

question 61

Multiple Choice

Webster Holding Ltd is a company which owns a number of fashion brands. If Webster Holding makes a taxable profit of $1 000 000 in the 2016 financial year and chooses to pay 100% of its profit after tax as a dividend, how much tax is paid by shareholders, assuming their marginal tax rate is 45%? Assume the company tax rate is 30%.

• A)$15 000
• B)$450 000
• C)$150 000
• D)$300 000

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Definitions:

Stockholders

Individuals or entities that own shares in a corporation, giving them ownership stakes in the company.

Personal Assets

Items of value owned by an individual, including cash, property, and investments.

Depreciation

The measure of wearing out, consuming, or other loss of value of a depreciable asset arising from use, passage of time, or obsolescence through technology and market changes.

Gross Investment

The total amount spent on purchases of new capital and on replacing depreciated capital within a given period.