Part A:

The expected pretax return on three stocks is divided between dividends and capital gains in the following way: Expected Expected Stock Dividend Capital Gain A $9- $16- 3 5 5 C 19- El- Required: a. If each stock is priced at $175. what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, {ii} a corporation paying tax at 21% {the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of10% on dividends and 5% on capital gains? b. Suppose that investors pay 40% tax on dividends and 10% tax on capital gains. If stocks are priced to yield an aftertax return of 10%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. Complete this question by entering your answers in the tabs below. Req A Reg B If each stock is priced at $1?5, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% [the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 10% on dividends and 5% on capital gains?I {Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Show less; Req A Hep B Suppose that investors pay 40% tax on dividends and 10% tax on capital gains. If stocks are priced to yield an aftertax return of 10%, what would A, B, and C each sell for? Assume the expected dividend is a level perpetuity. [Do not round intermediate calculations. Round your answers to 2 decimal places.)