Question

1. (a) US Ltd paid a dividend of $21 per share. During the end of the...

1. (a) US Ltd paid a dividend of $21 per share. During the end of the year, the share price
of US Ltd was $125.56. Calculate the Dividend Yield.
(b) John has just received a fully-franked dividend of $200 and he is currently at the
15% personal income tax bracket. The current company tax rate is 20%. Find his
after-tax dividend income.

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Answer #1

1)Dividend yield = Dividend /current share price

                   = 21 / 125.56

                   = 16.73%

2)After tax dividend income = Dividend income (1-personal tax rate)

                   = 200 (1-.15).

                   = 200*.85

                   = $ 170

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