You purchased 4,000 shares of High-Div Co. several years ago at $50 per share. The company has decided to pay a special dividend of $2.00 per share. Dividend payments are taxed at 15 percent. You intend to reinvest in the company through the dividend reinvestment program. If the company's stock is trading at $48.20 following the dividend payment, how many additional shares can you buy through the dividend reinvestment program? (Round your final answer to the nearest unit of shares.)

Question

Quizplus · Accepted Answer

First, calculate the total dividend received: 4,000 shares * $2.00 = $8,000. After a 15% tax, the amount available for reinvestment is $8,000 * 0.85 = $6,800. To find out how many shares you can buy, divide this amount by the current stock price: $6,800 / $48.20 ≈ 141 shares.

You Purchased 4,000 Shares of High-Div Co