Valiant Corp. is a C corporation that earned $3.4 per share before it paid any taxes. Valiant Corp. retained $1 of after-tax earnings for reinvestment and distributed what remained in dividend payments. If the corporate tax rate was 35% and dividend earnings were taxed at 12.5%, what was the value of the dividend earnings received after-tax by a holder of 100,000 shares of Valiant Corp.?

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A) Corporate tax paid on $3.4 earnings = $3.4 × 0.35 = 1.190; earnings after- 11ea84dc_f58a_ff3d_9a63_cb6a6e9f480a_TB1316_11_TB1316_11 earnings distributed as 11ea84dc_f58a_ff3e_9a63_4d5c251ffc1d_TB1316_11_TB1316_11 taxes paid on dividends by a 11ea84dc_f58a_ff3f_9a63_bfee29542543_TB1316_11_TB1316_11 after-tax dividends per 11ea84dc_f58b_2650_9a63_75deea576066_TB1316_11_TB1316_11 hence a holder of 100,000 shares receives 11ea84dc_f58b_2651_9a63_a5b06025943f_TB1316_11_TB1316_11