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A Stock Is Currently Priced at $65 Per Share and Will

Question 26

Multiple Choice

A stock is currently priced at $65 per share and will pay a $4 dividend in one year.What must the stock sell for in one year to meet investors' expectations of a 15% after-tax yield if dividends are taxed at 28%? Ignore capital gains taxes due to investor timing.


A) $70.75
B) $71.87
C) $73.63
D) $76.00 After-tax return =

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