(Continue 2). The corporation can pay a $100 dividend and the investor can earn 0.10 (after tax)...

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(Continue 2). The corporation can pay a $100 dividend and the investor can earn 0.10 (after tax) on the investment for one year.

Alternatively, the firm can retain the $100, earn 0.12 for one year and then pay a dividend (investment plus earnings).

What is the investor’s preference?

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