Question: After completing its capital spending for the year, Carlson Manufacturing has $1,000 of extra cash. Carlson’s

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Question:
After completing its capital spending for the year, CarlsonManufacturing has $1,000 of extra cash. Carlson’s managers mustchoose between investing the cash in Treasury bonds that yield 7percent or paying the cash out to investors who would invest in thebonds themselves.
Required;
a. If the corporate tax rate is 21 percent, what personal taxrate would make the investors equally willing to receive thedividend or to let Carlson invest the money?
b. Is the answer to (a) reasonable? Why or why not?
c. Suppose the only investment choice is a preferred stock thatyields 12 percent. The corporate dividend exclusion of 50 percentapplies. What personal tax rate will make the stockholdersindifferent to the outcome of Carlson’s dividend decision?
d. Is this a compelling argument for a low dividend payoutratio? Why or why not?
Please proper explain and do not copy from answers. Otherwise Ihave to report the answer.