Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Metal is currently trading for $40 per share and is about to pay a $5 special dividend. And, the tax rate on dividend is 40%,
Metal is currently trading for $40 per share and is about to pay a $5 special dividend. And, the tax rate on dividend is 40%, the tax rate on capital gains is 20%. Suppose that Metal made a surprise announcement that it would do a share repurchase rather than pay a special dividend, the net tax savings per share for an investor that would result from this decision is closest to:
Select one:
a. $3.75
b. $4.00
c. $5.00
d. $1.25
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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