Problem:
Miller, Inc., has declared a $6.10 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 10 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Miller sells for $112 per share, and the stock is about to go ex-dividend.
Required:
Question: What do you think the ex-dividend price will be?
Note: Provide support for your underlying principle.