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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The Answer of 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.

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