Question
Assume that it is 2008. You purchased CSH stock for $49 one year ago and it is now selling for $57. The company has announced
Assume that it is 2008. You purchased CSH stock for $49 one year ago and it is now selling for $57. The company has announced that it plans a $8 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 25 % and the dividend tax rate is 38 %, what ex-dividend price would make you indifferent now?
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Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac
26th edition
128574361X, 978-1305446052, 1305446054, 978-1285743615
