Use the Information for the Question(s)below

question 55

Multiple Choice

Use the information for the question(s) below.
Luther Industries has $5 million in excess cash and 1 million shares outstanding.Luther is considering investing the cash in one-year treasury bills that are currently paying 5% interest,and then using the cash to pay a dividend next year.Alternatively,Luther can pay the cash out as a dividend immediately and the shareholders can invest in the treasury bills themselves.Assume that capital markets are perfect.
-If Luther invests the excess cash in treasury bills,then the dividend per share next year will be closest to:

• A)$5.00.
• B)$5.25.
• C)$4.75.
• D)$1.05.

---

Definitions:

Clavicle

A long bone that serves as a strut between the shoulder blade and the sternum or breastbone, commonly known as the collarbone.

Scapula

The Scapula, commonly known as the shoulder blade, is a flat, triangular bone located on the back of the shoulder, connecting the humerus with the clavicle.

Sternum

A long flat bone located in the center of the chest, connected to the ribs via cartilage and forming part of the rib cage.

Humerus

A long bone in the upper arm that runs from the shoulder to the elbow, connecting with various muscles and joints.