Question: 6.ABC plc and DEF plc have exactly the same risk , and both have a current stock price of 150. ABC plc pays no dividend

 6.ABC plc and DEF plc have exactly the same risk ,

6.ABC plc and DEF plc have exactly the same risk , and both have a current stock price of 150. ABC plc pays no dividend and will have a price of 200 one year from now DEF plc pays dividends and wil have a price of 180 one year from now, after paying the dividend. The companies pay no taxes , Investors pay no taxes on capital gains but pay a 20% income tax on dividends . What is the value of the dividend that inveslors expecl DEF plc lo pay one year from today? Show your working . and state your reasoning

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!