Refer to Problem 10 Now assume that Kevin bought the stock at $17 00 per share and his tax rates are 30 on dividends and 15 on capital gains If Kevin changes the dividend policy from a low dividend payout policy to a high dividend payout policy, how does his wealth change ...

After tax cash flow of current policy 800 Shares 035 130 19600 N ...

Refer to Problem 10. Now assume that Kevin bought the stock at $17.00 per share and his

Question:

Refer to Problem 10. Now assume that Kevin bought the stock at $17.00 per share and his tax rates are 30% on dividends and 15% on capital gains. If Kevin changes the policy from a low-dividend-payout policy to a high-dividend-payout policy, how does his wealth change?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...