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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. 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 21% 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? 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? (Select from the drop-down menu.) Assuming 2010 tax rates are 15% on capital gain and 15% on dividends, if you sell the stock or wait and receive the dividend, you have different after-tax income. b. Assuming the capital gains tax rate is 21% 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? (Select from the drop-down menu.) If the capital gains tax rate is 21% and the dividend tax rate is 42%, then there V be a difference between the two options and the difference will be $ (Round to the nearest cent.) 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.) O A. The capital gains tax rate and the dividend tax rate are the same. O B. We are considering different years. OC. The capital gains tax rate and the dividend tax rate are different. O D. Selling the stock and waiting and receiving the dividend produce different before-tax cash flows.

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 21% 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? 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? (Select from the drop-down menu.) Assuming 2010 tax rates are 15% on capital gain and 15% on dividends, if you sell the stock or wait and receive the dividend, you have different after-tax income. b. Assuming the capital gains tax rate is 21% 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? (Select from the drop-down menu.) If the capital gains tax rate is 21% and the dividend tax rate is 42%, then there V be a difference between the two options and the difference will be $ (Round to the nearest cent.) 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.) O A. The capital gains tax rate and the dividend tax rate are the same. O B. We are considering different years. OC. The capital gains tax rate and the dividend tax rate are different. O D. Selling the stock and waiting and receiving the dividend produce different before-tax cash flows.

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation
Section: Chapter Questions
Problem 9MC
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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. 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 21% 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? 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? (Select from the drop-down menu.) Assuming 2010 tax rates are 15% on capital gain and 15% on dividends, if you sell the stock or wait and receive the dividend, you have different after-tax income. b. Assuming the capital gains tax rate is 21% 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? (Select from the drop-down menu.) If the capital gains tax rate is 21% and the dividend tax rate is 42%, then there be a difference between the two options and the difference will be $ (Round to the nearest cent.) 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. The capital gains tax rate and the dividend tax rate are the same. B. We are considering different years. C. The capital gains tax rate and the dividend tax rate are different. D. Selling the stock and waiting and receiving the dividend produce different before-tax cash flows.
Transcribed Image Text: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 21% 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? 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? (Select from the drop-down menu.) Assuming 2010 tax rates are 15% on capital gain and 15% on dividends, if you sell the stock or wait and receive the dividend, you have different after-tax income. b. Assuming the capital gains tax rate is 21% 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? (Select from the drop-down menu.) If the capital gains tax rate is 21% and the dividend tax rate is 42%, then there be a difference between the two options and the difference will be $ (Round to the nearest cent.) 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. The capital gains tax rate and the dividend tax rate are the same. B. We are considering different years. C. The capital gains tax rate and the dividend tax rate are different. D. Selling the stock and waiting and receiving the dividend produce different before-tax cash flows.
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