A regular C corporation made $40 in before-tax profits per-share this year. It retained none of that money. You own 100 shares and your tax bracket, 25%, is the same as the corporate profits tax rate.

You also own 100 shares in an investment company which archived the same eps and retained nothing. Which of the following is correct?

1. The investment companys after-tax eps is greater than that of the regular company, hence you will receive more dividends and pay more tax on it.
2. The investment companys after-tax eps is greater than that of the regular company, hence you will receive more dividends and pay less tax on it.
3. The investment companys after-tax eps is less than that of the regular company, hence you will receive less dividends and pay less tax on it.
4. The investment companys after-tax eps is greater than that of the regular company, hence you will receive less dividends and pay less tax on it.
5. The investment companys after-tax eps is less than that of the regular company, hence you will receive more dividends and pay less tax on it.