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

Question

Quizplus · Accepted Answer

C)PV = 11ea7cce_3cc6_f344_928c_27929046b83a_TB1626_11 = $5 × 100M shares × .35 = $175 million

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