Use the Information for the Question(s)below

question 15

Multiple Choice

Use the information for the question(s) below.
Luther Industries has $5 million in excess cash and one million shares outstanding. Luther is considering investing the cash in one-year Treasury bonds 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 bonds themselves. Assume that capital markets are perfect.
-If Luther decides to pay the dividend immediately, the dividend per share will be closest to:

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

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Definitions:

Beyond Compliance

Refers to businesses going above the legal requirements to be more socially responsible and environmentally friendly.

Environmentally Friendly

Practices or products that have a minimal impact on the environment, often emphasizing sustainability and conservation of resources.

Cost Savings

Reductions in expenses achieved through efficient management and operations, often resulting in increased profits.

Corporate Social Responsibility

Practices and policies undertaken by corporations to positively impact society and the environment beyond legal and regulatory requirements.