User Account

All Pages

Investor deferring capital gains taxes

Assignment Help Accounting Basics
Reference no: EM13963143

Southern Rail has just declared a dividend of $1. The average investor in Southern Rail faces an ordinary tax rate of 50 percent. Although the capital gains rate is also 50 percent, it is believed that the investor gets the advantage of deferring this tax until future years (the effective capital gains rate will therefore be 50 percent discounted back to the present). If the price of the stock before the ex-dividend day is $10 and it drops to $9.20 by the end of the ex-dividend day, how many years is the average investor deferring capital gains taxes? (Assume that the opportunity cost used by the investor in evaluating future cash flows is 10 percent.)

Reference no: EM13963143

Questions Cloud

Policy of increasing dividends : UJ Gas is a utility that has followed a policy of increasing dividends every quarter by 5 percent over dividends in the prior year. The company announces that it will increase quarterly dividends from $1.00 to $1.02 next quarter.
What is the total momentum of the photons falling : The intensity of light with a mean wavelength of 854 nm falling on a solar sail is 140 watts/m^2. The sail is oriented perpendicular to the direction of the incoming light, in order to intercept as much light as possible. What is the total momentu..
Write a paper that describe the e-business models : Write a paper that includes the following: A description of the following business models: brick-and-mortar, e-business and e-commerce.
Calculate the power at the input to the cell phone receiver : The threshold carrier to noise ratio (CNR) for successful reception of the FM signal is 20.0 dB. What is the link margin under line of sight (LOS) conditions? Under what conditions might the margin be reduced to 0 dB, or the CNR at the receiver fa..
Investor deferring capital gains taxes : If the price of the stock before the ex-dividend day is $10 and it drops to $9.20 by the end of the ex-dividend day, how many years is the average investor deferring capital gains taxes? (Assume that the opportunity cost used by the investor in ev..
Dividend policies of three dividend-paying utilities : You are comparing the dividend policies of three dividend-paying utilities. You have collected the following information on the ex-dividend behavior of these firms.
What is the inductive reactance : Suppose you are looking at two loops in the plane of the page as shown. When the switch is thrown closed in the left hand coil, what is:
Catering explanation for dividends : In conventional corporate finance, firms trade off the costs of paying dividends (the differential tax costs to their investors, the issuance costs of new financing) against the benefits of dividends (signaling benefits and reduced agency costs) t..
Write a program that inputs a file of text : Write a program that inputs a file of text and counts the occurrence of words in the text (for example, "write" appears 1 time in this sentence; "a" appears 2 times).

Reviews

Write a Review

Accounting Basics Questions & Answers

  Recording journal entry-estimated warranty

Prepare a journal entry to record the estimated liability. Assume that during 2010, products under warranty must be repaired using repair parts from inventory costing $4,950. Prepare the journal entry to record the repairs of products.

  Which of the following is false regarding the issue of

which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?the issuance of

  Provide for plant expansion and related working capital

Provide for plant expansion and related working capital.

  Describe the project scope and project management plan

Describe the project scope and project management plan

  Prepare a partial balance sheet for rose corporation

Refer to RE18-8. Prepare a partial balance sheet for Rose Corporation at the end of Year 1.In RE18-8, Rose Corporation uses the installment method and has the following information for Year 1 of its operations:

  Experimental stem cell technique currently being used

Describe one other experimental stem cell technique currently being used in organ transplantation

  Cyprus corp has excess capacity under what situations

cyprus corp. has excess capacity. under what situations should the company accept a special order for less than the

  Cost of goods manufactured

Kushman Combines, Inc. has $20,000 of ending finished goods inventory as of December 31, 2010. If beginning finished goods inventory was $10,000 and cost of goods sold was $40,000, how much would Kushman report for cost of goods manufactured?

  Stephanies building which was used in her business was

stephanies building which was used in her business was destroyed in a fire. stephanies adjusted basis in the building

  Estimating company current stock price

The Isberg Company just paid a dividend of $0.80 per share, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.25, the market risk premium is 5.00%, and the risk-free rate is 4.00%. Wh..

  Delta belt company shows 1080000 of variable conversion

delta belt company shows 1080000 of variable conversion costs 360000 fixed conversion costs and 72000 machine hours for

  If fixed costs are 40500 per period variable costs are

if fixed costs are 40500 per period variable costs are 12.50 per unit are revenue is 20.00 per unit how many units must

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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