Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Nov 27, 2020

Dramatic Corporation operates in the IT industry. An investor buys a stock of the company today for $30, receives a dividend of $3 at the

Dramatic Corporation operates in the IT industry. An investor buys a stock of the company today for $30, receives a dividend of $3 at the end of the year, and then sells the stock for $36. If the dividend is taxed at 40% and the capital gain at 20%.

Required

What is his return after tax?

Step by Step Solution

★★★★★

3.40 Rating (153 Votes )

There are 3 Steps involved in it

Step: 1

After tax dividend income dividend1t 3104 180 Capital gain ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments An Introduction

Authors: Herbert B Mayo

9th Edition

324561385, 978-0324561388

More Books

Students also viewed these Finance questions

Question

★★★★★

a. An investor buys a 4.4% annual coupon payment bond with six years to maturity. The bond has a yield-to-maturity of 6%. The par value is $1000. i. Determine the market price of the bond. ii....

Answered: 1 week ago

Question

★★★★★

An investor buys a stock for $10 per share and expects the value of the stock to grow annually at 9 percent for ten years, at which time the individual plans to sell it. What is the anticipated sale...

Answered: 1 week ago

Question

★★★★★

An investor buys a call at a price of $4.50 with an exercise price of $40. At what stock price will the investor break even on the purchase of the call?

Answered: 1 week ago

Question

★★★★★

Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $200,000 and has an estimated useful life of 8 years with zero salvage value . Management...

Answered: 1 week ago

Question

★★★★★

Brianna just signed a lease on a rental apartment. The current rent is $1,330 per month, and she estimates a 6% increase each year. Use her estimate to predict the sum of the next five years' worth...

Answered: 1 week ago

Question

★★★★★

Answer the below questions. (a) What is meant by historical volatility? (b) What is meant by implied volatility?

Answered: 1 week ago

Question

★★★★★

Describe positive and negative influences of technology on the learning and development of children and adolescents.

Answered: 1 week ago

Question

★★★★★

Bryce Publishing Co. prepares income statements segmented by divisions, but the chief operating officer is not certain about how the company is actually performing. Financial data for the year follow...

Answered: 1 week ago

Question

★★★★★

The current price of Parador Industries stock is $57 per share. Current earnings per share are $3.7, the earnings growth rate is 6 percent, and Parador does not pay a dividend. The expected return on...

Answered: 1 week ago

Question

★★★★★

The folowing trial balance of Watervray Co. doss nat balanca. WATERWAY cO. TRIAL BALANCE JUNE 30, 2020 Debit Credit Cash $3.259 Accounts Receivable $2,852 Supplies 1,189 Equipmant 4,189 Accounts...

Answered: 1 week ago

Question

★★★★★

Junktrader is an online company that specializes in matching buyers and sellers of used items. Buyers and sellers can purchase a membership with Junktrader, which provides them advance notice of...

Answered: 1 week ago

Question

★★★★★

3. Which among the following is popularly called Hypo? [A] Silver bromide [B] Silver nitrate [C] Sodium thiosulphate [D] Sodium phosphate

Answered: 1 week ago

Question

★★★★★

1. Daltons name is associated with which of the following terms? [A] Electron [B] Proton [C] Atom [D] Neutron

Answered: 1 week ago

Question

★★★★★

Define Administration?

Answered: 1 week ago

Question

★★★★★

Define Decision making

Answered: 1 week ago

Question

★★★★★

What are the major social responsibilities of business managers ?

Answered: 1 week ago

Question

★★★★★

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who...

Answered: 1 week ago

Question

★★★★★

What mass of KBr (in grams) should you use to make 350.0 mL of a 1.30 M KBr solution?

Answered: 1 week ago

Question

★★★★★

A financial manager with $1,000 to invest is faced with two competing alternatives, both of which cost $1,000. Alternative A will annually pay $275 for five years while alternative B pays $300 a year...

Answered: 1 week ago

Question

★★★★★

The U.S. Treasury issues a ten-year, zero coupon bond. a) What will be the original issue price if comparable yields are 6 percent? (Assume annual compounding.) b) What will be the price of this zero...

Answered: 1 week ago

Question

★★★★★

Why may the annual growth in a funds net asset value not be comparable to the return earned by an individual investor?

Answered: 1 week ago

Question

★★★★★

Spartan Corporation made a distribution of $500,000 to Rusty Cedar in partial liquidation of the company on December 31 of this year. Rusty, an individual, owns 100% of Spartan Corporation. The...

Answered: 1 week ago

Question

★★★★★

Oriole Corporation, a privately-held company, has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows: Larry...

Answered: 1 week ago

Question

★★★★★

Bonnie and Clyde are the only two shareholders in Getaway Corporation. Bonnie owns 60 shares with a basis of $3,000, and Clyde owns the remaining 40 shares with a basis of $12,000. At year end,...

Answered: 1 week ago

Previous Question Next Question