Question
Assume that it is 2008. You purchased CSH stock for $40 one year ago and it is now selling for $49. The company has announced
Assume that it is 2008. You purchased CSH stock for $40 one year ago and it is now selling for $49. The company has announced that it plans a $9 special dividend. You are considering whether to sell the stocknow, or wait to receive the dividend and then sell.
a. Assuming 2008 taxrates, whatex-dividend price of CSH will make you indifferent between selling now andwaiting?
b. Suppose the capital gains tax rate is 33% and the dividend tax rate is 38%, whatex-dividend price would make you indifferentnow?
Assuming 2008 tax rates, what ex-dividend price of CSH will make you indifferent between selling now and waiting?
In 2008, the capital gains tax rate isand the dividend tax rate is 15% The tax on a $9 capital gain is $? , and the tax on a $9 special dividend is $?. The after-tax income for both will be $?
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