Liquidate investments to raise cash


Please assist with the given problem.

Consider three investors who need to partially liquidate investments to raise cash. In this case all investments have been held for 3 or more years. Investor A waited for a $1,500 qualified dividend distribution from her mutual fund, and investor B received $1,500 in interest income from a CD. However, because Investor C could not wait for a distribution, he decided to sell $1,500 of appreciated stock shares. Assuming no commissions, sales charges, or state income tax, and a 25-percent federal marginal tax bracket, which investment will provide the greatest after tax amount? Would your answer change if all investors were in the 15 percent tax bracket?

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Accounting Basics: Liquidate investments to raise cash
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