Estes Park, Inc., has declared a dividend of $8.40 per share. Suppose capital gains are not taxed,

Question:

Estes Park, Inc., has declared a dividend of $8.40 per share. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. The company’s stock sells for $87 per share, and the stock is about to go ex dividend. What do you think the ex-dividend price will be?

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...

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