Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Good Values Incorporated is all-equity-financed. The total market value of the firm currently is $140,000, and there are 4,000 shares outstanding. Ignore taxes. a. The

image text in transcribed Good Values Incorporated is all-equity-financed. The total market value of the firm currently is $140,000, and there are 4,000 shares outstanding. Ignore taxes. a. The firm has declared a $5 per share dividend. The stock will go ex-dividend tomorrow. At what price will the stock sell today? b. At what price will the stock sell tomorrow? c. Now assume that the tax rate on all dividend income is 35% and the tax rate on capital gains is zero. At what price will the stock sell today, taking account of the taxation of dividends? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. d. Now suppose that instead of paying a dividend, Good Values plans to repurchase $14,000 worth of stock. What will be the stock price before the repurchase? e. Now suppose that instead of paying a dividend, Good Values plans to repurchase $14,000 worth of stock. What will it be after the repurchase? f. Now suppose that instead of paying a dividend, Good Values plans to repurchase $14,000 worth of stock. Does the existence of taxes tend to favor dividends or repurchases

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

blur-text-image

Step: 3

blur-text-image

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

Finance For IT Decision Makers

Authors: Michael Blackstaff

3rd Edition

1780171226, 978-1780171227

More Books

Students also viewed these Finance questions

Question

Calculate the slope at point A and at point B.

Answered: 1 week ago

Question

What are hallucinogens, and what effects do they havepg12

Answered: 1 week ago