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please help Problem 17-26 Payout Policy and Taxes (LO4) Good Values Incorporated is all-equity-financed. The total market value of the firm currently is $125,000, and
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Problem 17-26 Payout Policy and Taxes (LO4) Good Values Incorporated is all-equity-financed. The total market value of the firm currently is $125,000, and there are 2,500 shares outstanding. Ignore taxes. a. The firm has declared a $6 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 30% 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 $15,000 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 $15,000 worth of stock. What will it be after the repurchase? f. Now suppose that instead of paying a dividend, Good Values plans to repurchase $15,000 worth of stock. Does the existence of taxes tend to favor dividends or repurchasesStep by Step Solution
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