You purchased CSH stock for $40 one year ago and it is now selling for $50. The
Question:
You purchased CSH stock for $40 one year ago and it is now selling for $50. The company has announced that it plans a $10 special dividend. You are considering whether to sell the stock now, or wait to receive the dividend and then sell.
a. Assuming 2008 tax rates, what ex-dividend price of CSH will make you indifferent between selling now and waiting?
b. Suppose the capital gains tax rate is 20% and the dividend tax rate is 40%, what ex-dividend price would make you indifferent now?
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