Dividend Policy and Company Value: You Own 7,000 Shares of Irri-Gate

question 2

Multiple Choice

Dividend policy and company value: You own 7,000 shares of Irri-gate Co. The company has decided to pay a special dividend of $1.00 per share. Dividend payments are taxed at 15 per cent. You intend to reinvest your dividend back into the company, but the company does not have a dividend reinvestment program. To reinvest through your broker, you will have to pay a $46 commission. If the company's shares are trading at $12.43 following the dividend payment, how many additional shares will you be able to purchase?

• A) 563 shares
• B) 481 shares
• C) 478 shares
• D) 475 shares