Answer questions in the following, and provide detailed calculations where needed.

Question $1$: Suppose you own $100$ shares of General Motors stock, and the company earned $$6$ per share during the last reporting period. Suppose also that GM could either pay all of its earnings out as dividends $($in which case you would receive $$600)$ or retain the earnings in the business, buy more assets, and cause the price of the stock to increase by $$6$ per share $($in which case the value of your stock would rise by $$600).$

a$.$ How would the tax laws influence what you, as a typical stockholder, would want the company to do$?$

b$.$ Would your choice be influenced by how much other income you had? Why might the desires of a $35-$year$-$old doctor differ with respect to corporate dividend policy from the desires of a retiree living on a small income?

c$.$ How might the corporation$$s decision with regard to the dividends it pays influence the price of its stock?