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Please help solve the questions attached to this post. Thanks 1- The HNH Corporation will pay a constant dividend of $ 3.00 per share, per
Please help solve the questions attached to this post.
Thanks
1- The HNH Corporation will pay a constant dividend of $ 3.00 per share, per year, in perpetuity. Assume all investors pay a 15 % tax on dividends and that there is no capital gains tax. Suppose the other investments with equivalent risk to HNH stock offer an after-tax return of 10 %. a. What is the price of a share of HNH stock? b. Assume that management makes a surprise announcement that HNH will no longer pay dividends but will use the cash to repurchase stock instead. What is the price of a share of HNH stock now? 2- Suppose that all capital gains are taxed at a 17 % rate, and that the dividend tax rate is 48 %. Arbuckle Corp. is currently trading for $44, and is about to pay a $4 special dividend. a. Absent any other trading frictions or news, what will its share price be just after the dividend is paid? (please round to the nearest cent)Step by Step Solution
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