3. Suppose that all capital gains are taxed at a 20% rate, and that the dividend tax rate is 40%. Winterfell and Sons is currently trading for $25, and is about to pay a $3 special dividend.

a. What is Winterfell and Sons share price just after the dividend is paid?

b. Suppose Winterfell and Sons announces that it would do a share repurchase instead of the special dividend. What net tax savings per share would result from this decision for an investor?

c. What would happen to Winterfell and Sons share price upon the announcement of this decision?