Assume that it is 2008. You purchased CSH stock for $42 one year ago and it is now selling for $54. The company has announced that it plans a $12 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?