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Assume the stockholders of Barrick stock are in the 25 percent tax bracket. The closing price...

Assume the stockholders of Barrick stock are in the 25 percent tax bracket. The closing price of the stock today was $64.20 a share. The firm pays a quarterly dividend of $1.72 per share. What is the expected opening price of the stock tomorrow if tomorrow is an ex-dividend date?

$46.38

$50.74

$56.33

$62.91

$68.12
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Answer #1

Price on Ex-DIv date = Stock Today - [ DIv*(1-tax rate ) ]

= 64.20 - [ 1.72 ( 1 - 0.25) ]

= 64.20 - [ 1.72 *0.75 ]

= 64.20 - 1.29

= 62.91

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