The expected pretax return on three stocks is divided between dividends and capi
The expected pretax return on three stocks is divided between dividends and capital gains in the following way:Stock ExpectedDividend ExpectedCapital GainA $0 $36B 18 18C 36 0 a.If each stock is priced at $100 what are the expected net returns on each stock to (i) a pension fund that does not pay taxes (ii) a corporation paying tax at 35% and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? (Do not round intermediate calculations. Round your answers to 2 decimal places.)Stock Pension InvestorCorporation IndividualA % % %B % % %C % % % b.Suppose that investors pay 50% tax on dividends and 20% tax on capital gains. If stocks are priced to yield an 8% return after tax what would A B and C each sell for? Assume the expected dividend is a level perpetuity. (Do not round intermediate calculations. Round your answers to 2 decimal places.)Stock P0A $BC
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