For every dollar of operating income paid out as equity income, the shareholder realizes:

Question

Quizplus · Accepted Answer

The equation for the after-tax return on equity income is (1 - TpE) times (1 - TC), where TpE is the personal tax rate on equity income and TC is the corporate tax rate. This means that for every dollar of operating income paid out as equity income, the shareholder realizes (1 - TpE) times (1 - TC) of that dollar after taxes.

For Every Dollar of Operating Income Paid Out as Equity