You purchase a stock at the beginning of the year at a price of $108. At the

Question:

You purchase a stock at the beginning of the year at a price of $108. At the end of the year the stock pays a of $1.80 and you sell the stock for $117. What is your return for the year? Now suppose that dividends are taxed at 15 percent and long-term capital gains (over 11 months) are taxed at 30 percent. What is your aftertax return for the year?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...