Higher after tax income the investor

Assignment Help Business Management
Reference no: EM131089990

Assume that the tax rate on capital gains is 15%, while the tax rate on dividend income is 20%. An investor is compariing two options for the stock ABC Firm;1) received $100 on dividend now, 2) get unrealized capital gains of $100 now shich are left to grow with the firm for five years. The expected rate of return on the stock ABC firm is 8%. The investor will invest his after tax dividend incom in ABC for five years. How much higher after tax income the investor will get in five years under the capital gains option 2 than under the dividend income option 1. (difference of option 2 income over option 1 income?

Reference no: EM131089990

Questions Cloud

What is the singulate mean age at marriage : What is the mean age at marriage for Philippine men in 1980? What is the median age at marriage? What is the singulate mean age at marriage
What is the maximum allowable noise at the amplifier output : What is the maximum allowable noise at the amplifier output?
Financial security to establishing password systems : As a financial analyst, you are required to come up with a plan to implement financial security to establishing password systems.
What is its waac : The after-tax cost of dept is 6.00%, the cost of preferred is 7.50%, and the cost of common using retained earnings is 12.75%. The firm will not be issuing any new stock. What is its WAAC?
Higher after tax income the investor : The investor will invest his after tax dividend incom in ABC for five years. How much higher after tax income the investor will get in five years under the capital gains option 2 than under the dividend income option 1. (difference of option 2 inc..
Why does this state practice civil law : If DNA plus corroborating evidence is what helps put a person on death row, should they be executed if they are found sane and have been found guilty of a capital crime?
Review the goal you wanted to achieve : Explain all of the above questions as thoroughly (at least one FULL page total) as possible. Answers to the questions must be in Times New Roman 12 point font, , standard one inch margins, typed, double spaced, spell-checked, grammar-checked, and ..
Under what conditions would the other choice be better : Which approach would you take and why? Under what conditions would the other choice be better?
Identify concerns about beta and the capm : 1. Specify how risk aversion influences required rates of return. 2. Identify concerns about beta and the CAPM.

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd