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a company has declared a dividend of $6.75 per share on its stock. capital gains are not taxed. suppose the irs has issued a new regulation that requires taxes of 25 percent be withheld at the time the dividend is paid. the stock currently sells for $106.15 per share. what will the ex-dividend price be?

Respuesta :

The ex-dividend price of the share will be $101.09

A dividend is a gift that a business delivers to its shareholders, whether it be cash or something else. Dividends may be distributed in a number of ways, including stock dividends, cash payments, and other forms. The board of directors of a corporation determines its dividend, and shareholders must approve it.

Dividend per share = $6.75

Tax percentage = 25%

The selling price of the stock = $106.15

After-tax dividend amount:

= 6.75(1 - 0.25) = 5.06

The stock price will drop by the aftertax dividend amount:

Ex-dividend price = Selling price - After tax dividend amount

= 106.15 - 5.06

= 101.09

Learn more about dividends:

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