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Dividends and Taxes, Stock Split and Stock Dividend

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Looking for assistance with the attached Excel spreadsheet utilizing Excel formulas to solve.

#1 Midnight Hour Inc gas 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 will be?

Roll Corp currently has 240,000 shares of stock outstanding that sell for $86 per share. Assuming no market imperfections or tax effects exist, what will be the share price after:
a. RC has a five-for-three stock split?
b. RC has a 15% stock dividend?
c. RC has a 42.5 % stock dividend?
d. RC has a four-for-seven reverse stock split?

#7. The market value balance sheet for outbox manuf is shown here. Outbox has declared a 25% stock dividend. The stock goes ex dividend tomorrow. There are 30,000 share of stock outstanding. What will the ex-dividend price be?

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

#16. The sharpe co just paid a dividend of 1.60 per share of stock. Its target payout ratio is 40%. The company expects to have earnings per share of $6.20 one year from now.
a. if the adjustment rate is .3 as defined in the Lintner model, what is the dividend one year from now?

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Solution Preview

See the attached file.


Dividend $5.10
Dividend Tax 15%
Stock Price $83

Step 1: Calculate the After-Tax Dividend $4.34
Step 2: Ex-Dividend Price = $78.67

CHAPTER 16: PROBLEM 4 (a thru d)

# of shares of stock ...

Solution Summary

This solution provides the calculations needed, along with required formulas, in the attached Excel file.