The stock of Red's Hardware closed at $56.60 per share today. Tomorrow morning, the stock goes ex dividend paying a dividend of $1.60 per share. The tax rate on dividends is 15 percent. All else the same, what price will the stock open at tomorrow morning?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 5P
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The stock of Red's Hardware closed at $56.60 per share today. Tomorrow morning, the stock goes ex dividend paying a dividend of $1.60 per share. The tax rate on dividends is 15 percent. All else the same, what price will the stock open at tomorrow morning?
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