Problem

Dividends and Taxes Lee Ann, Inc., has declared a $5.60 per-share dividend. Suppose capita...

Dividends and Taxes Lee Ann, Inc., has declared a $5.60 per-share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld when the dividend is paid. Lee Ann sells for $75 per share, and the stock is about to go ex dividend. What do you think the ex-dividend price will be?

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