Eric Nadel owns 400 shares of Ranger, Inc. The company's board of directors recently declared a cash dividend of $1.94 a share payable April 15 (a Wednesday) to shareholders of record on March 19 (a Thursday).

a. How much in dividends, if any, will Eric receive if he sells his stock on March 18 ? _______

b. Assume Eric decides to hold on to the stock rather than sell it. If he belongs to the company's dividend reinvestment plan, how many new shares of stock will he receive if the stock is currently trading at $45.70 and the plan offers a 4.2 % discount on the share price of the stock? _________ (Assume that all of Eric's dividends are diverted to the plan.)

Will Wilfred have to pay any taxes on these dividends, given that he is taking them in stock rather than cash? _______

a. The amount in dividends, if any, Eric will receive if he sells his stock on March 18 is $_____ . (Round to the nearest dollar.)

b. If he belongs to the company's dividend reinvestment plan and the stock is currently trading at $45.70 and the plan offers a 4.2 % discount on the share price of the stock, the number of new shares he will receive is ____ . (Round to three decimal places.)

Will Eric have to pay any taxes on these dividends, given that he is taking them in stock rather than cash?(Select the best answer below.)

A.Eric will not have to pay taxes, since the dividend is treated as a stock dividend. Unlike cash dividends, reinvestment dividends are not taxed until you actually sell the stock.

B.Eric will have to pay taxes. Since it is not treated as a cash dividend, the dividends are taxed at a higher, less preferential rate of 25% or more.

C.Eric will have to pay taxes, since the dividend is treated as a cash dividend. The dividends are taxed at a low, preferential rate of 15% or less.

D.Eric will have to pay taxes, since the dividend is treated as a cash dividend. The dividends are taxed at a higher, less preferential rate of 25% or more.