Prior to TD 2004/22, Pinder Ltd announces an off-market buyback to its shareholders at $15 per share. Of the $15, $10 was a fully franked dividend and the capital component was $5. The market price for Pinder Ltd is $20 per share. Susan owns one share in Pinder Ltd which she had bought 3 years ago at $10. Pinder Ltd’s tax rate is 26% and Susan’s personal tax rate is 36%. If Susan decides to participate in the buyback, what is her gain/loss relative to selling shares in the exchange at the market price of $20, based only on the information above? (round to the nearest two decimal places) a) None of the other answers. b) $-4.27 c) $-4.46 d) $-3.89 e) $-4.08 *explain in full detail
Prior to TD 2004/22, Pinder Ltd announces an off-market buyback to its shareholders at $15 per share. Of the $15, $10 was a fully franked dividend and the capital component was $5. The market price for Pinder Ltd is $20 per share. Susan owns one share in Pinder Ltd which she had bought 3 years ago at $10. Pinder Ltd’s tax rate is 26% and Susan’s personal tax rate is 36%. If Susan decides to participate in the buyback, what is her gain/loss relative to selling shares in the exchange at the market price of $20, based only on the information above? (round to the nearest two decimal places) a) None of the other answers. b) $-4.27 c) $-4.46 d) $-3.89 e) $-4.08 *explain in full detail
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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Prior to TD 2004/22, Pinder Ltd announces an off-market buyback to its shareholders at $15 per share. Of the $15, $10 was a fully franked dividend and the capital component was $5. The market price for Pinder Ltd is $20 per share. Susan owns one share in Pinder Ltd which she had bought 3 years ago at $10. Pinder Ltd’s tax rate is 26% and Susan’s personal tax rate is 36%. If Susan decides to participate in the buyback, what is her gain/loss relative to selling shares in the exchange at the market price of $20, based only on the information above? (round to the nearest two decimal places)
a) None of the other answers.
b) $-4.27
c) $-4.46
d) $-3.89
e) $-4.08
*explain in full detail
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