This topic contains a solution. Click here to go to the answer

Author Question: Last week Lucky Strike Inc. was worth $100M and its shares traded for $10 (there are 10 million ... (Read 105 times)

lbcchick

  • Hero Member
  • *****
  • Posts: 550
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 25% and 15% 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


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by lbcchick on Apr 25, 2021

karlss

  • Sr. Member
  • ****
  • Posts: 321
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.
Answer Preview
Only 44% of students answer this correctly




lbcchick

  • Member
  • Posts: 550
Reply 2 on: Apr 25, 2021
Wow, this really help


smrtceo

  • Member
  • Posts: 344
Reply 3 on: Yesterday
Gracias!

 

Did you know?

The first oral chemotherapy drug for colon cancer was approved by FDA in 2001.

Did you know?

Illness; diuretics; laxative abuse; hot weather; exercise; sweating; caffeine; alcoholic beverages; starvation diets; inadequate carbohydrate consumption; and diets high in protein, salt, or fiber can cause people to become dehydrated.

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

Did you know?

A headache when you wake up in the morning is indicative of sinusitis. Other symptoms of sinusitis can include fever, weakness, tiredness, a cough that may be more severe at night, and a runny nose or nasal congestion.

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

For a complete list of videos, visit our video library