Hayley recently invested $32,000 in a public utility stock paying a 6 percent an

Question

Hayley recently invested $32,000 in a public utility stock paying a 6 percent annual dividend. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

If Hayley reinvests the annual dividend she receives net of any taxes owed on the dividend, how much will her investment be worth in six years if the dividends paid are qualified dividends? (Hayley

Hayley recently invested $32,000 in a public utility stock paying a 6 percent annual dividend. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Annual after tax return = 6*(1-.15) = 5.1%

Investment value after 6 years = 32000*(1+.051)^6 = 43129

Part B:

Annual after tax return = 6*(1-.28) = 4.32%

Investment value after 6 years = 32000*(1+.0432)^6 = 41243

Thanks.

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