126Investors Require an After-Tax Rate of Return of 12% on Their

question 124

Essay

126.Investors require an after-tax rate of return of 12% on their stock investments.The tax rate on dividends is 28%, while capital gains escape taxation.A firm will pay $3 per share in dividends one year from now, after which the stock is expected to be at a price of $15.Determine the current stock price and the expected before tax rate of return for a one-year holding period.

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Definitions:

Withholding

The act of deliberately not providing information, resources, or emotions, which can affect communication and relationships.

Personal Information

Data or details about an individual that identify them or reveal their private thoughts, experiences, or characteristics.

Nonconversation

A way to describe the amount of actual conversation in cliché conversation.

Gut-Level Communication

An informal form of communication that is based on instinctive feelings rather than rational thought.