After-Tax Proceeds Assignment | Homework For You
The Barryman Drilling Company is planning an on-market buyback of $1million worth of the company’s 500000 shares, which are currently trading at a price of $10.Stan Barryman is the founder of the company and still holds 10000 company shares, which he originally purchased for $8 per share (more than 12 months ago).
a) If Stan decides to sell 2000 of his shares for$10ashare, what will be his after-tax proceeds if his personal marginal tax rate is 47%?
b) The Barryman Drilling Company is reconsidering its plan to buy back$1million of its ordinary shares and instead plans to paya$1million fully franked cash dividend, which amounts to $2 per ordinary share.If the company tax rate is 30% and Stan Barryman’s personal marginal taxrateis47%, what tax liability does this create for him? What will be Stan’safter-tax proceeds from the dividend distribution? Get Finance homework help today