Assume that Provident Health System, a for-profit hospital, has $1 million in taxable income for 2011, and its tax rate is 30 percent.
a). Given this information, what is the firm’s net income? (Hint: net income is what remains after taxes have been paid.)
b). Suppose the hospital pays out $300,000 in dividends. A stockholder receives 10,000. If the stockholder’s tax rate on dividends is 15 percent, what is the after-tax dividend?