Explore BrainMass
Share

Explore BrainMass

    Dividends in the market

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Problem 1:
    Midnight Hour Inc. has declared a $5.10 per-share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15%. New IRS regulations require that taxes be withheld at the time the dividend is paid. Midnight Hour sells for $83 per share and the stock is about to go ex-dividend. What do you think the ex-dividend price will be?

    Problem 7:
    The market value balance sheet for Outbox Manufacturing is shown here. Outbox has declared a 25% stock dividend. The stock goes ex-dividend tomorrow (the chronology for a stock dividend is similar to that for a cash dividend). There are 30,000 shares of stock outstanding. What will the ex-dividend price be?

    Market Value Balance Sheet:

    Cash: $145,000 Debt: $127,000
    Fixed Assets: $598,000 Equity: $616,000
    Total: $743,000 Total: $ 743,000

    © BrainMass Inc. brainmass.com October 10, 2019, 6:00 am ad1c9bdddf
    https://brainmass.com/business/accounting-for-corporations/dividends-market-524814

    Solution Preview

    Problem 1:

    Ex-dividend Price = Declared Dividend - (Declared Dividend x Tax Rate) = $5.10 ...

    Solution Summary

    The dividends in the market are determined.

    $2.19