Investors Require an After-Tax Rate of Return of 9% on Their

question 49

Essay

Investors require an after-tax rate of return of 9% on their stock investments.The tax rate on dividends is 26%, while capital gains escape taxation.A firm will pay $2.50 per share in dividends one year from now, after which the stock is expected to be at a price of $30.Determine the current stock price and the expected before tax rate of return for a one-year holding period.
$$\begin{array}{l}\begin{array} { | l | r | } \hline\text { DATA }\\\hline \text { Investor return } & 9 \% \\\hline \text { Dividend amount } & \$ 2.50 \\\hline \text { Tax rate } & 20 \% \\\hline \text { Future price prediction } & \$ 30.00 \\\hline\end{array}\end{array}$$

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Definitions:

Employee Morale Risks

Potential threats to the emotional well-being and satisfaction of employees, which can adversely affect productivity and organizational performance.

Service Risks

Refers to the potential for losses or negative outcomes that a business may experience when delivering services to customers.

HR Activities

Tasks and functions carried out by the Human Resources department, including recruiting, training, employee relations, and benefits management.

Outsourcing

The practice of hiring third parties to handle tasks traditionally performed within the company, often to save costs or access specialized expertise.