Use the Information for the Question(s)below

question 6

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 decides to pay the dividend immediately the dividend per share will be closest to:

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

---

Definitions:

Lactic Acid

An organic compound produced in muscles during intense activity, in fermentation processes, and as a by-product in certain metabolic pathways, contributing to muscle fatigue.

Krebs Cycle

A series of enzymatic reactions in the mitochondria of cells that oxidize acetyl CoA to carbon dioxide and water, generating ATP and other high-energy compounds.

Spiracles

Small openings on the surface of some animals, especially insects, which lead to the respiratory system, allowing for gas exchange.

Ventilation

The process of actively moving air or water over a respiratory surface.