Use the Following Information to Answer the Question(s) Below

question 79

Multiple Choice

Use the following information to answer the question(s) below.
d'Anconia Copper has $200 million in cash that it can use for a share repurchase. Suppose instead that d'Anconia Copper invests the funds in an account paying 5% interest for one year. Assume that the corporate tax rate is 35%, the individual capital gains rate is 15% and the individual rate on ordinary income is 30%.
-Consider the following equation: P_retain = P_cum × The term P_retain in this equation represents:

• A) the price of the stock if it retains and invests the cash.
• B) the percentage of net income retained or reinvested back into the firm.
• C) the percentage of net income paid out as a cash dividend.
• D) the price of the stock if it retains cash to use in a share repurchase.