Presence of taxes and bankruptcy costs

Assignment Help Financial Management

Reference no: EM131306461

A) RFC Corp. has announced a $1 dividend. If RFC’s price last price cum-dividend is $50, what should its first ex-dividend price be (assuming perfect capital markets)? Why?

B) Does your answer change in imperfect markets, i.e in the presence of taxes and bankruptcy costs?

Please show work for part A and B

Reference no: EM131306461

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