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the shares, what will be your expected total after-tax rate of return from the investment and selling the shares after 1 year?

the shares, what will be your expected total after-tax rate of return from the investment and selling the shares after 1 year?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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As an investor with a marginal federal tax rate of 29% and a provincial tax rate of 11.16%, you have decided to purchase 2,000 shares of ABC CORP. and hold them for 1 year. The current market price of a share of ABC is $ 40.00. An investment analyst has indicated that the shares are expected to rise in price by 10% in 1 year's time and that ABC is expected to declare and pay a dividend of $ 1.00 per share for the coming year. Required: If you purchase the shares, what will be your expected total after-tax rate of return from the investment and selling the shares after 1 year?
Transcribed Image Text:As an investor with a marginal federal tax rate of 29% and a provincial tax rate of 11.16%, you have decided to purchase 2,000 shares of ABC CORP. and hold them for 1 year. The current market price of a share of ABC is $ 40.00. An investment analyst has indicated that the shares are expected to rise in price by 10% in 1 year's time and that ABC is expected to declare and pay a dividend of $ 1.00 per share for the coming year. Required: If you purchase the shares, what will be your expected total after-tax rate of return from the investment and selling the shares after 1 year?
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