Calculate the ex-dividend price will be

Reference no: EM13831822

RRM Incorporated has just declared a dividend of $10.25 per share. The tax rate of dividends is 20 percent. The tax rate on capital gains is zero. The tax laws require the taxes to be withheld when the dividend is paid. RRM currently sells for $107 per share and the stock is about to go ex-dividend. What do you calculate the ex-dividend price will be?

A. 98.80

B. 96.75

C. 93.80

The firm you are CEO if has a current period cash flow of 1.0 million and pays no dividend. The present value of the company’s future cash flows is $2.5 million. The company is entirely financed with equity and there are 500,000 shares outstanding. Assume the dividend tax rate is zero.

What is the share price of your firm?

Suppose you and the board announce a plan to pay out 60 percent of the current cash flows as a dividend to its shareholders. How can a shareholder, who owns 1000 shares, achieve a zero pay-out policy on their own?

A. Share price = $10.00, purchase 206.90 shares

B. Share price = $7.14, purchase 315.79 shares

C. Share price = $10.00, purchase 171.43 shares

Reference no: EM13831822

Questions Cloud

What is the primary cause for emotional : What is the primary cause for emotional

Stock market from corporate share repurchases : Share repurchases have grown significantly over the past decade or two. In fact, a recent radio commentator suggested that the current rise in share prices (both the S&P 500 and the Dow Jones averages are trading at historic highs as of this writing..

What are some continuous improvement systems you are aware : What are some continuous improvement systems you are aware of and why are they effective? Explain how recording processes will help you and your team identify further opportunities for improvement.

What are the legal guidelines and ethical implications : Provide two or more detailed alternatives (regarding Miranda not being considered for the promotion) for Bob and Kelly to consider. Compare and contrast the alternatives, identifying the expected outcome of each. What are the legal guidelines and ..

Calculate the ex-dividend price will be : RRM Incorporated has just declared a dividend of $10.25 per share. The tax rate of dividends is 20 percent. The tax rate on capital gains is zero. The tax laws require the taxes to be withheld when the dividend is paid. RRM currently sells for $..

Bond issue : Bond Issue Bob is managing a bond issue for the company. You receive an urgent voice mail from him.

The density of copper decreases as temperature increases : The density of copper decreases as temperature increases.

Despite the principle of separation of powers : despite the principle of separation of powers

Analysis of the leadership style : An analysis of the leadership style of your selected leader, according to an existing leadership style theory. An analysis of the health of that leader's organization, based upon media information

User Account

All Pages