You purchased CSH stock for $40 and it is now selling for $50. The company has announced
Question:
You purchased CSH stock for $40 and it is now selling for $50. The company has announced that it plans a $10 special dividend.
a. Assuming 2010 tax rates, if you sell the stock or wait and receive the dividend, will you have different after-tax income?
b. If the capital gains tax rate is 20% and the dividend tax rate is 40%, what is the difference between the two options in part (a)?
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...
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