You purchased 1,000 shares of Zebulon Copper Co. five years ago at $50 per share. Today Zebulon

Question:

You purchased 1,000 shares of Zebulon Copper Co. five years ago at $50 per share. Today Zebulon is trying to decide whether to repurchase shares at $70 per share through a fixed-price tender offer or pay a $70 cash per share. If capital gains are taxed at a 15 percent rate, then at what rate must dividends be taxed for you to be indifferent between receiving the and selling your shares back to Zebulon?

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...