Assume capital markets are perfect. Kay industries currently has $100 million invested in short-term securities paying 6%, and it pays out the interest payments on these securities as a dividend. The board is considering selling the Treasury securities and paying out the proceeds as a one-time dividend payment. Assume investors pay a 12% tax on capital gains and a 21% tax on interest income, while Kay pays a 21% corporate tax rate. a. If the board went ahead with this plan, what would happened to the value of Kay stock upon announcement of a change in policy? (Hint: Use equation 17.7 to determine the current effective tax disadvantage of retaining cash.) b. What would happen to the value of Kay stock on the ex-dividend date of the one-time dividend? c. Given these price reactions, will this decision benefit investors? a. If the board went ahead with this plan, what would happened to the value of Kay stock upon announcement of a change in policy? (Hint: Use equation 17.7 to determine the current effective tax disadvantage of retaining cash.) Assume that investors pay a 12% tax on dividends and capital gains, and a 21% tax on interest income, while Kay pays a a 21% corporate tax rate. by $ million on announcement. (Select If the board went ahead with this plan, the equity value of Kay would go from the drop-down menu and round to the nearest integer.)