Reference no: EM132790705
As discussed in the text, in the absence of market imperfections and tax effects, we would expect the share price to decline by the amount of the dividend payment when the stock goes ex dividend. Once we consider the role of taxes, however, this is not necessarily true.
One model has been proposed that incorporates tax effects into determining the ex-dividend price:
( P 0 - P X ) ?/?D = ( 1 - T P ) ?/? ( 1 - T G )
- Here P0 is the price just before the stock goes ex, PX is the ex-dividend share price, D is the amount of the dividend per share, TP is the relevant marginal personal tax rate on dividends, and TG is the effective marginal tax rate on capital gains.
Problem a. If TP = TG = 0, how much will the share price fall when the stock goes ex?
Problem b. If TP = 15 percent and TG = 0, how much will the share price fall?
Problem c. If TP = 15 percent and TG = 20 percent, how much will the share price fall?
Problem d. Suppose the only owners of stock are corporations. Recall that corporations get at least a 50 percent exemption from taxation on the dividend income they receive, but they do not get such an exemption on capital gains. If the corporation's income and capital gains tax rates are both 21 percent, by how much does this model predict the share price will fall?
Problem e. What does this problem tell you about real-world tax considerations and the dividend policy of the firm?
What is the value of a share of gillette stock
: According to the? dividend-discount model, what is the value of a share of Gillette stock if the? firm's equity cost of capital is 8.3%??
|
What were the major findings from the study
: You will review both qualitative and quantitative research. The topic is up to you as long as you choose a peer-reviewed, academic research piece.
|
What is the journal entry for February
: On February 6, 2019, the customer subsequently returned P120,000 of damaged merchandise. What is the journal entry for February 6
|
Ethics and pricing
: As a consumer think of a place you like to shop at because of the so-called great bargains, coupons, cash back and or discounts they offer.
|
How much does model predict the share price will fall
: If the corporation's income and capital gains tax rates are both 21 percent, by how much does this model predict the share price will fall?
|
What will you be paying as monthly mortgage payments
: You have secured a loan from your bank for two years to build your home. What will you be paying as monthly mortgage payments
|
How iot devices typically connect using the internet
: Identify how IoT devices typically connect using the Internet through the IP (Internet Protocol) stack. Discuss the specifics of this communication method.
|
Calculate the current ratio and the quick ratio
: Calculate (1) The Current Ratio (2) The Quick Ratio and (#) Earnings Per Share. Financial records of Weekend Corporation for the year ended December 31, 2019
|
Describe use case examples of iot services and applications
: In a follow-up to your IoT discussion with management, you have been asked to document and describe Use Case examples of IoT Services and Applications.
|