1. Dividends and Taxes [LO2] Ginger, Inc., has declared a $5.35 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. The company's stock sells for $74.20 per share, and the stock is about to go ex dividend. What do you think the ex-dividend price will be?
1. Dividends and Taxes [LO2] Ginger, Inc., has declared a $5.35 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. The company's stock sells for $74.20 per share, and the stock is about to go ex dividend. What do you think the ex-dividend price will be?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![1. Dividends and Taxes [LO2] Ginger, Inc., has declared
a $5.35 per share dividend. Suppose capital gains are not
taxed, but dividends are taxed at 15 percent. New IRS
regulations require that taxes be withheld at the time the
dividend is paid. The company's stock sells for $74.20 per
share, and the stock is about to go ex dividend. What do you
think the ex-dividend price will be?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa67834ee-0fdf-4424-b804-68a4c92cb763%2F435557b0-3927-4890-90b8-9fe6358fd21d%2F5k54k4_processed.png&w=3840&q=75)
Transcribed Image Text:1. Dividends and Taxes [LO2] Ginger, Inc., has declared
a $5.35 per share dividend. Suppose capital gains are not
taxed, but dividends are taxed at 15 percent. New IRS
regulations require that taxes be withheld at the time the
dividend is paid. The company's stock sells for $74.20 per
share, and the stock is about to go ex dividend. What do you
think the ex-dividend price will be?
Transcribed Image Text:Chapter 17
Question 1
Input Area:
Dividend per share
Tax rate
$
5,35
15%
Price
74,20
Output Area:
After-tax Dividend
4,55
Ex-dividend price
%24
%24
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