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Author Question: Last week Lucky Strike Inc. was worth $100M and its shares traded for $10 (there are 10 million ... (Read 15 times)

folubunmi

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on: Apr 25, 2021
Last week Lucky Strike Inc. was worth $100M and its shares traded for $10 (there are 10 million shares outstanding). Lucky is an all equity firm. Yesterday Lucky management announced that the company won $20 million in the lottery and the stock price rose to $12. Lucky is trying to decide whether to issue a $2 dividend or repurchase 1.667 million shares for $12 each. You own 100 shares of Lucky Strike. If your marginal tax rate on dividends is 15% and 25% on capital gains, what do you want the company to do? Assume that you bought your shares last week and will sell your shares after the dividend or repurchase. (Hint: Compare your after-tax wealth in each case.)
◦ Repurchase stock because after tax wealth is $1,170
◦ Issue the dividend because after tax wealth is $1,170
◦ Repurchase stock because after tax wealth is $1,190
◦ Issue the dividend because after tax wealth is $1,190
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by folubunmi on Apr 25, 2021

akemokai

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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folubunmi

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Reply 2 on: Apr 25, 2021
Thanks for the timely response, appreciate it

Animal_Goddess

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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