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Question 15.P.1: If the common stockholders of ABD Corporation are taxed at 0...

If the common stockholders of ABD Corporation are taxed at 0.52 and if they buy XYZ stock at $100, how much could the corporation ABD pay for XYZ stock and have the investors indifferent? They will hold and not sell.

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x=\frac{100}{1-t_{p} } =\frac{100}{1-0.52} =\$208.33.

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