You purchased 2,500 shares of Digital Vision, Corp. several years ago for $40 per share. The company is offering a fixed-price tender offer repurchase for $54 per share. What is the amount of after-tax proceeds you would receive from taking part in the repurchase, if capital gains are taxed at 15 percent?

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Quizplus · Accepted Answer

The capital gain per share is $14 ($54 - $40). For 2,500 shares, the total gain is $35,000. After a 15% tax, the tax amount is $5,250. The after-tax proceeds are $135,000 (total sale) - $5,250 (tax) = $129,750.

You Purchased 2,500 Shares of Digital Vision, Corp