Alex, Inc. is financed 100% with equity. The firm has 100,000 shares of stock outstanding with a market price of $5 per share. Total earnings for the most recent year are $50,000. The firm has $25,000 excess cash. It is considering using this excess cash to pay it out as dividend or use it to repurchase $25,000 of its own stock. The firm has other assets worth $475,000 (at market value). For each of the questions that follow, assume no transaction costs, and no taxes except for question C and D. A) Suppose your 10,000 shares were originally purchased for $3 per share, the dividend income is subject to 30% income tax rate, and capital gains are taxed at half the regular tax rate of 40%. How much more or less tax will you pay in creating home-made dividend if the firm were to use its $25,000 excess cash to buy back its stock? B) Assume the firm uses the $25,000 excess cash to buy back its stock at $5 per share. What will be the market price per share of Alex's stock after the repurchase? C) Assume the firm pays the $25,000 excess cash in the form of a cash dividend. What will be the market price per share of Alex's stock once the dividend is paid? D) Suppose the firm uses its excess cash to buy back its stock. How many shares will you sell to have an after-tax amount equal to the after-tax amount you would have had if the firm had paid its excess cash as dividend? Alex, Inc. is financed 100% with equity. The firm has 100,000 shares of stock outstanding with a market price of $5 per share. Total earnings for the most recent year are $50,000. The firm has $25,000 excess cash. It is considering using this excess cash to pay it out as dividend or use it to repurchase $25,000 of its own stock. The firm has other assets worth $475,000 (at market value). For each of the questions that follow, assume no transaction costs, and no taxes except for question C and D. A) Suppose your 10,000 shares were originally purchased for $3 per share, the dividend income is subject to 30% income tax rate, and capital gains are taxed at half the regular tax rate of 40%. How much more or less tax will you pay in creating home-made dividend if the firm were to use its $25,000 excess cash to buy back its stock? B) Assume the firm uses the $25,000 excess cash to buy back its stock at $5 per share. What will be the market price per share of Alex's stock after the repurchase? C) Assume the firm pays the $25,000 excess cash in the form of a cash dividend. What will be the market price per share of Alex's stock once the dividend is paid? D) Suppose the firm uses its excess cash to buy back its stock. How many shares will you sell to have an after-tax amount equal to the after-tax amount you would have had if the firm had paid its excess cash as dividend