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Stock Security and After-Tax Return

You own a stock that will pay a dividend of $1.75. The stock currently sells for $22.46. You purchased this security 3 months ago for $20.67. If you sell this security on the ex-dividend date, tomorrow, what is your annualized (quarterly compounded) after-tax return if you expect the stock price to drop by $1.15? Assume a capital gains tax of 20% and dividend tax rate of 33%.

a. 8.15%
b. 32.60%
c. 15.79%
d. 26.94%

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You own a stock that will pay a dividend of $1.75. The stock currently sells for $22.46. You purchased this security 3 months ago for $20.67. If you sell this security on the ex-dividend date, tomorrow, what is ...

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Solution to problem with full equations.

$2.19