You purchased CSH stock for $40 and it is now selling for $50. The company has announced

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You purchased CSH stock for $40 and it is now selling for $50. The company has announced that it plans a $10 special dividend.
a. Assuming 2016 tax rates, if you sell the stock or wait and receive the dividend, will you have different after-tax income?
b. If the capital gains tax rate is 20% and the dividend tax rate is 40%, what is the difference between the two options in part (a)?

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Fundamentals Of Corporate Finance

ISBN: 9780135811603

5th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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