Question

Brent, a single taxpayer, has a 24% marginal tax rate. He is considering an investment that will earn qualified dividends at a rate of 7% before tax. What is Brent's after-tax rate of return on the securities

Answer 1

Answer:

Brent's after-tax rate of return on the securities is 5.32%

Explanation:

Given a 7% before tax dividend rate and a 24% marginal tax rate, the after-tax rate of return will be 5.32% (7% x (100%-24%).