The 4,000 shares of Medco stock that Diana purchased 111⁄2 months ago for $12 per share are now trading at $19 per share. Diana’s regular marginal tax rate is 35 percent and her tax rate for long-term capital gains is 15 percent.

a. What is Diana’s after-tax net cash flow from the sale if she sells the stock now?

b. What is Diana’s after-tax net cash flow from the sale if she waits one month before selling the stock for $19 per share?

c. What do you recommend?

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