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You purchased CSH stock for $42 and it is now selling for $53. The company has announced that it plans a $11 special dividend. a.
You purchased CSH stock for $42 and it is now selling for $53. The company has announced that it plans a $11 special dividend. a. Assuming 2010 tax rates of 15% on dividends and capital gains, if you sell the stock or wait and receive the dividend, will you have different after-tax income? b. Assuming the capital gains tax rate is 20% and the dividend tax rate is 42%, if you sell the stock or wait and receive the dividend, will you have different after-tax income? If the after-tax income is different, why? The after-tax income of selling the stock or waiting and receiving the dividend is different in part (b) because: (Select the best choice below.) A. Selling the stock and waiting and receiving the dividend produce different before-tax cash flows. B. The capital gains tax rate and the dividend tax rate are different. C. We are considering different years. D. The capital gains tax rate and the dividend tax rate are the same
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