Sophie Chan owns 100,000 shares of PAT Company. PAT is selling for h40 per share, so her investment is worth h4,000,000. Chan reinvests the gross amount of all dividends received to purchase additional shares. Assume that the clientele for PAT shares consists of tax-exempt investors. If PAT pays a h1.50 dividend, Chan’s new share ownership after reinvesting dividends at the ex-dividend price would be closest to:
A. 103,600.
B. 103,750.
C. 103,900.
Ans: C. 103,900.
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