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.

Evaluate the welfare implications of trade restrictions and government interventions in the market.

Understand and calculate government revenue generated from tariffs and quotas.

Analyze the impact of international trade policies on domestic markets.

Apply economic theory to real-world events such as natural disasters and policy proposals.

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Definitions:

Modus Tollens

A form of logical argument where the denial of the consequent leads to the denial of the antecedent; typically structured as "If P, then Q. Not Q, therefore not P."

Hypothetical Syllogism

Hypothetical Syllogism is a form of logical argument comprising two conditional statements and a conclusion, based on the "if...then..." structure.

Fallacy

A mistaken belief or error in reasoning often resulting in a weak argument.

Consequent

The second part of a conditional statement, which is the result or outcome that follows from the condition stated in the first part (the antecedent).