In 2006,Luther Incorporated Paid a Special Dividend of $5 Per

question 88

Multiple Choice

In 2006,Luther Incorporated paid a special dividend of $5 per share for the 100 million shares outstanding.If Luther has instead retained that cash permanently and invested it into treasury bills earning 5%,then the present value of the additional taxes paid by Luther would be closest to:

• A)$35 million
• B)$290 million
• C)$175 million
• D)$585 million

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Definitions:

Revenue-And-Costs

The financial inflows associated with business operations and the expenditures required to generate revenue.

Price

Price is the amount of money expected, required, or given in payment for something, serving as the economic mechanism that balances supply and demand in markets.

Advertising

The process or occupation involved in making adverts for business products or services.

Product Differentiation

The practice of differentiating a product or service to appeal more to a specific target market.