Problem:
Dark Day, Inc., has declared a $5.10 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 15 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Dark Day sells for $93.85 per share, and the stock is about to go ex dividend.
Required:
Question: What do you think the ex-dividend price will be?
Note: Explain all calculation and formulas.