Consider a C corporation. The corporation earns $3.5 per share before taxes. After the corporation has paid its corresponding taxes, it will distribute 50% of its earnings to its shareholders as a dividend. The corporate tax rate is 35%, the tax rate on dividend income is 15%, and the personal income tax rate is set at 39.6%.
1. What are the shareholder's earnings from the corporation after all corresponding taxes are paid?
2. How much is the total effective tax rate on the corporation earnings?