Rodger Owns 100% of the Shares in Trevor Inc Given These Assumptions, How Much Cash Does Rodger Have from C

question 39

Essay

Rodger owns 100% of the shares in Trevor Inc., a C corporation. Assume the following for the current year:
$$\begin{array} { | l | } \hline \text { Trevor Inc.'s pre-tax income } = \$ 16,000 \\\hline \text { Trevor Corp's marginal tax rate } = 35 \% \\\hline \text { Percentage of after-tax earnings retained by Trevor Corp } \\= 0 \% \text { (i.e. all after-tax earnings distributed) } \\\hline \text { Rodger's dividend tax rate } = 5 \% \\\hline\end{array}$$
Given these assumptions, how much cash does Rodger have from the dividend after all taxes have been paid?

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Definitions:

Sensory Pathways

Sensory Pathways are the neural routes by which sensory information from the peripheral nervous system is transmitted to the central nervous system.

Just Noticeable Difference

The minimal change in a stimulus that can just barely be detected by an organism, also known as the threshold of sensation.

Absolute Threshold

The minimum intensity of a stimulus that one can detect 50% of the time, a basic concept in sensory psychology.

Inattentional Blindness

The phenomenon in which we shift our focus from one object to another and, in the process, fail to notice changes in objects to which we are not directly paying attention.