ABC, Inc. has just announced today (May 20, Mon) that it would pay $2/share dividends to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
ABC, Inc. has just announced today (May 20, Mon) that it would pay $2/share dividends to each shareholder of record on June 5 (Wed). Its current share price is $45 and its shareholders' average tax rate is 30%. Assume that there are no other news or developments that will affect the stock prices between now and the dates: (A) What will likely be the price of its stock on June 4 (Tue)? (B) What will likely be the price on June 3 (Mon)? (C) Instead of paying $2 in cash, the company announced today that it would use the aggregate equivalent of $2/share dividends to buy back outstand shares over the next 12 months. Would its share price likely to increase or decline upon the announcement? Explain. ABC, Inc. has just announced today (May 20, Mon) that it would pay $2/share dividends to each shareholder of record on June 5 (Wed). Its current share price is $45 and its shareholders' average tax rate is 30%. Assume that there are no other news or developments that will affect the stock prices between now and the dates: (A) What will likely be the price of its stock on June 4 (Tue)? (B) What will likely be the price on June 3 (Mon)? (C) Instead of paying $2 in cash, the company announced today that it would use the aggregate equivalent of $2/share dividends to buy back outstand shares over the next 12 months. Would its share price likely to increase or decline upon the announcement? Explain.
Expert Answer:
Answer rating: 100% (QA)
a Dividend Assuming 50 Current price tax rate 2 per share 3... View the full answer
Related Book For
Posted Date:
Students also viewed these economics questions
-
Write a brief letter in response to the following column: DEAR ANN LANDERS: This is going to seem like a terrifically trivial problem compared to most you receive, but Ive got to get it off my chest....
-
In response to the obesity problem among children and adolescents, some policymakers have proposed a tax on soft drinks, those 150-calorie drinks that are responsible for about 10 percent of the...
-
In response to the above scenario, management sells 500, 90-day Eurodollar time deposits futures contracts trading at an index price of 98. Interest rates rise as anticipated and your financial firm...
-
Arrange the following events in the correct temporal sequence during eukaryotic cell division, starting with the earliest: (a) condensation of the chromosomes, (b) Movement of chromosomes to the...
-
Find the annual percentage rate on a loan of $700 without interest with 12 monthly payments. The loan requires $50
-
Manny Carson, certified management accountant and controller of Wakeman Enterprises, had been given permission to acquire a new computer and software for the companys accounting system. The capital...
-
Does Fairmont have any contactor personnel whose have terminated but are being paid through payroll after termination (e.g., ghost employees)?
-
Deanna Nardelli started her own consulting firm, Nardelli Consulting, on May 1, 2014. The trial balance at May 31 is as follows. In addition to those accounts listed on the trial balance, the chart...
-
Find the solutions of the equation a cosh x b sinh x = c, assuming that a, b, and c are constants. [Hint: The result should have the form x = f(a,b,c), where f(a, b, c) is a specific function.] =
-
Consider Sales & Operations planning. If the costs for hiring and firing employees are very small relative to the inventory holding costs, then which Sales & Operations plan is likely to have the...
-
The common stock of Vicary, Inc. is selling for $78 a share. Currently, the all equity firm has a total market value of $6,825,000. How many shares of stock will be outstanding if the firm does a...
-
What is the straight-line method of depreciation, and how is it different from other depreciation methods? 2. What is the formula used to calculate depreciation expense under the straight-line...
-
A business retains 79% of its customers from one year to the next. If the business uses a 11% discount rate, calculate the margin multiple. Rounding: 2 decimal places.
-
All types of projects operate on a budget. Project managers need to see what the overall cost of the project is going to be from the start to the scheduled launch date. Cost Baseline is a way for PMs...
-
How do postcolonial critiques of globalization challenge dominant narratives of progress and development, foregrounding the legacies of colonialism, imperialism, and uneven power relations in shaping...
-
ACCT 326 Accounting System Review This project requires you to evaluate a PC-based accounting system to see how the system handles recording transactions, collecting data, and generating reports and...
-
The largest portion of fresh water today is located in a. the major rivers and lakes of the world. b. groundwater resources. c. clouds. d. ice caps and glaciers.
-
Tarick Toys Company manufactures video game consoles and accounts for product costs using process costing. The following information is available regarding its June inventories. The following...
-
Suppose that an excise tax of 20 apiece and a sales tax of 30 apiece are imposed simultaneously. Answer again all of the questions in Exercise. Suppose the demand curve for oranges is given by the...
-
True or False: Suppliers' ability to pass on an excise tax to demanders depends on the strength of demand. If the demand curve is very high, a large percentage of the excise tax will be passed on,...
-
Redo all the parts of Problem, describing the long-run effects instead of the short-run effects. Assume that cab driving is an increasing-cost industry. a. The price of gas falls. b. The rental price...
-
Let \(\left\{\mathbf{X}_{n}ight\}_{n=1}^{\infty}\) be a sequence of \(d\)-dimensional random vectors where \(\mathbf{X}_{n}\) has distribution function \(F_{n}\) for all \(n \in \mathbb{N}\) and let...
-
Prove the converse part of the proof of Theorem 4.17. That is, let \(\left\{\mathbf{X}_{n}ight\}_{n=1}^{\infty}\) be a sequence of \(d\)-dimensional random vectors and let \(\mathbf{X}\) be a...
-
Let \(\left\{X_{n}ight\}_{n=1}^{\infty}\) and \(\left\{Y_{n}ight\}_{n=1}^{\infty}\) be sequences of random variables where \(X_{n}\) has a \(\mathrm{N}\left(\mu_{n}, \sigma_{n}^{2}ight)\)...
Study smarter with the SolutionInn App