Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wilfred Nadeau owns 200 shares of Consolidated Glue. The company's board of directors recently declared a cash dividend of 42 cents a share payable April

image text in transcribed

Wilfred Nadeau owns 200 shares of Consolidated Glue. The company's board of directors recently declared a cash dividend of 42 cents a share payable April 22 (a Wednesday) to shareholders of record on March 26 (a Thursday). a. How much in dividends, if any, will Wilfred receive if he sells his stock on March 24? b. Assume Wilfred decides to hold on to the stock rather than sell it. If he belongs to the company's dividend reinvestment plan, how many new shares of stock will he receive if the stock is currently trading at S47.90 and he plan offers a 4.3% discount on the share pnce o the stock? Assume that all o W ed's dridends are diverted to he plan w wife have to pay any axes on the ed idents gnen hat e s a n them in stock rather than cash? a. The amount in dividends, if any, Wilfred will receive if he sells his stock on March 24 iRound to the nearest dollar.) b. If he belongs to the company's dividend reinvestment plan and the stock is currently trading at $47.90 and the plan offers a 4.3% discount on the share price of the stock, the number of new shares he will receive is (Round to three decimal places.) Will Wilfred have to pay any taxes on these dividends, given that he is taking them in stock rather than cash? (Select the best answer below.) O A Wilfred will have to pay taxes since the dividend is treated as a cash dividend. The dividends are taxed at a low, preferential rate of 15% or less. O B. Wilfred will have to pay taxes. C. Wilfred will have to pay taxes, since the dividend is treated as a cash dividend. The dridends are taxed at a higher, less preferential rate of 25% or more. Since it is not treated as a cash dividend, the dividends are taxed at a higher, less preferential rate of 25% or more. D. Wilfred will not have to pay taxes, since the dividend is treated as a stock dividend. Unlike cash dividends, reinvestment dividends are not taxed until you actually sell the stock

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_2

Step: 3

blur-text-image_3

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

Market Liquidity Theory Evidence And Policy

Authors: Thierry Foucault, Marco Pagano, Ailsa Roell

1st Edition

0199936242, 978-0199936243

More Books

Students also viewed these Finance questions

Question

What is the purpose of the document?

Answered: 1 week ago