DEVRY FIN 516 Week 1 Homework
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FIN 516 Week 1 Homework Problem 17-7 on Ex-dividend Price Based on Chapter 17 Payout Policy
Natsam Corporation has $ 250 million of excess cash. The firm has no debt and 500 million shares outstanding with a current market price of $ 15 per share. Natsam’ s board has decided to pay out this cash as a one-time dividend.
Problem 17-15 on Distribution to Shareholders Based on Chapter 17 Payout Policy
Suppose that all capital gains are taxed at a 25 % rate and that the dividend tax rate is 50 %. Arbuckle Corporation is currently trading for $ 30 and is about to pay a $ 6 special dividend.
Problem 17-19 on Dividend Capture Strategy Based on Chapter 17 Payout Policy
Que Corporation pays a regular dividend of $ 1 per share. Typically, the stock price drops by $ 0.80 per share when the stock goes ex-dividend. Suppose the capital gains tax rate is 20 %, but investors pay different tax rates on dividends.