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Nancy Is a 40% Shareholder and President of Robin Corporation,a

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Essay

Nancy is a 40% shareholder and president of Robin Corporation,a regular corporation.The board of directors of Robin has decided to pay Nancy a $100,000 bonus for the year based on her outstanding performance.The directors want to pay the $100,000 as salary,but Nancy would prefer to have it paid as a dividend.If both Robin Corporation and Nancy are in a 35% marginal tax bracket irrespective of the treatment of the bonus,discuss which form of payment would be most beneficial for each party.(Ignore any employment tax considerations. )


Definitions:

Significance Level

The risk set by the researcher for rejecting a null hypothesis when it is true.

Obtained Value

The value that results from the application of a statistical test.

Fisher's Exact Test

A statistical significance test used for small sample sizes, analyzing the association between two categorical variables.

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