Suppose the hospital pays out $300,000 in dividends. A stockholder receives $10,000. If a stockholder's tax rate on dividends is 15 percent, what is the after tax dividend?
10,000 * 0.15 = 1500
$10,000 - 1,500 = ?
8,500
To calculate the after-tax dividend, you need to deduct the taxes from the total dividend amount. Here's how you can do it step by step:
1. Start with the total dividend paid out by the hospital, which is $300,000.
2. Calculate the tax amount by multiplying the total dividend by the tax rate in decimal form. The tax rate is given as 15 percent, so convert it to decimal form by dividing it by 100. 15 percent divided by 100 is 0.15.
Tax amount = $300,000 * 0.15 = $45,000
3. Subtract the tax amount from the total dividend to find the after-tax dividend.
After-tax dividend = $300,000 - $45,000 = $255,000
Therefore, the after-tax dividend is $255,000.