a. What is the value of a firm paying $100 dividend taxed at .396, with zero growth

Question:

a. What is the value of a firm paying $100 dividend taxed at .396, with zero growth and a .07248 discount rate?

b. Assume the $100 per year is reinvested for 20 years and the basic firm value of $833.33 is present at time 20. image text in transcribed

The firm's value at time 20 is $8,038.57.
Assume the $7,205.24 is sold at time 20 (assume a zero tax basis).
Tax = .2(7,205.24) = $1,441.05.
What is the present value of this strategy?

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Private Equity Transforming Public Stock To Create Value

ISBN: 9780471392927

1st Edition

Authors: Harold Bierman

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Question Posted: Jun 07, 2024 01:12 AM

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a. What is the value of a firm paying $100 dividend taxed at .396, with zero growth

Question:

= FV 100B (20, .12) (1.12)20 = $7,205.24 Firm's Value + 833.33 $8,038.57

Step by Step Answer:

Private Equity Transforming Public Stock To Create Value

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