At the beginning of the year Generous Joe purchased 2,000 shares of Disbursement Co. for $50/share. This represents the entirety of Joes wealth. At year-end, when Disbursement Co. is trading for $60/share, Joe needs $2,000 in order to pay off his holiday debts. Assume Joe faces a 15% tax on dividends and on capital gains and faces no transaction costs for buying or selling shares. Assume taxes are due immediately upon payment of a dividend or sale of stock.

Disbursement Co. pays a dividend at year-end of $2.00/share.

[1 pt] a) After receipt of the dividend, how much will Joe have to pay off his debts?

[2 pts] b) Joe wants to remain fully invested in Disbursement Co. After using the proceeds from the dividend to pay off his debts. How many shares will he be able to re-purchase (round shares to a whole number and ignore any remaining funds due to rounding)?

[1 pt] c) What is Joes total wealth after paying off his debts and re-investing any excess funds?

Joe is relieved to have received this dividend just in time to pay off his debts and excited that he was able to re-invest the extra proceeds. Consider the alternative where Disbursement Co. did NOT pay a dividend and instead, Joe sold just enough shares to pay off his holiday debts.

[2 pts] d) How many shares would Joe have had to sell (round the number of shares up to the nearest whole number)?

[2 pts] e) What would Joes wealth be after making this sale and satisfying his holiday debts (ignoring any rounding related excess funds)? Which would have been the better deal for Joe and why?