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Calculating Pre-tax Income from Dividends

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Alan Jeffrey paid \$400 in taxes on dividends he received from his ownership of 100 shares of Alpha Corporation's stock. His personal tax rate is 40% and the corporate tax rate is 20%.

Assuming that Alpha Corporation fully distributes all its net income as dividends, what is its pre-tax earnings (profit) per share?

A

$10.00

B

$12.50

C

$7.50

D

$15.00

E

$17.50