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Assume that it is 2008. You purchased CSH stock for $44 one year ago and it is now selling for $56. The company has announced
Assume that it is 2008. You purchased CSH stock for $44 one year ago and it is now selling for $56. 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 25% and the dividend tax rate is 42%, what ex-dividend price would make you indifferent now? a. 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 is 15% and the dividend tax rate is 15%. The tax on a $12 capital gain is $ and the tax on a $12 special dividend is $. The after-tax income for both will be $. (Round to the nearest cent.)
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