General Manufacturing Company (GMC) follows a policy of paying out 50% of its net income as cash dividends to its shareholders each year. The company plans to do so again this year, during which GMC earned $100 million in net profits after tax. The company has 40 million shares outstanding and pays dividends annually. Assume that an investor purchased GMC shares a year ago at $45 per share. The investor, who faces a personal tax rate of 15% on both dividend income and on capital gains, plans to sell the stock soon. Transactions costs are negligible.

i. Calculate the after-tax return this investor will earn if she sells GMC shares at the current $54 share price prior to the ex-dividend date.

ii. Calculate the after-tax return the investor will earn if she sells GMC shares on the exdividend date, assuming that the price of GMC shares falls by the dividend amount on the ex-dividend date.