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Suppose Mr.X wants to sell a share of ABD stock which he bought for $100 two years ago. The selling price today is $140. He
Suppose Mr.X wants to sell a share of ABD stock which he bought for $100 two years ago. The selling price today is $140. He pays 20% tax on capital gains and pays 30% tax on dividend income. Suppose further that tomorrow is the ex-dividend date, and the amount of dividend is $5 per share. If he sells the stock today, what would be the after-tax income from the sales?
| A. | $130 | |
| B. | $131.5 | |
| C. | $132 | |
| D. | $133 | |
| E. | $140 |
If he can sell the share for $135 tomorrow morning, what would be the after-tax income from the sales?
| A. | $130 | |
| B. | $131.5 | |
| C. | $132 | |
| D. | $133 | |
| E. | $140 |
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