Suppose the hospital pays out $300,000 in dividends. A stockholder receives $10,000. If the stockholder's tax rate on dividends is 15 percent, what is the after-tax dividend?
10,000 * 0.15 = 1,500
10,000 - 1,500 = ?
To calculate the after-tax dividend, we need to determine the amount of taxes the stockholder owes on the dividend payment and subtract it from the total dividend received.
Here's how we can break it down:
1. Calculate the tax owed on the dividend:
Tax owed on dividends = Dividend received * Tax rate
Tax owed on dividends = $10,000 * 0.15 = $1,500
2. Subtract the tax owed from the dividend received to get the after-tax dividend:
After-tax dividend = Dividend received - Tax owed on dividends
After-tax dividend = $10,000 - $1,500 = $8,500
Therefore, the after-tax dividend is $8,500.