Fjord makes the decision to implement the new technology at the cost of $2.5 million. Fjord will use equity to finance part of this investment. Fjord has decided to institute a dividend reinvestment plan (DRIP). Stockholders will have the option of continuing to receive cash dividends or of having the company use the dividends to buy more of the companys stock. Fjords management anticipates a high participation rate in the DRIP. A high participation rate suggests that Fjord stockholders:

(A) may be better off if the company were to reduce its cash dividend, which would save stockholders some personal incomes taxes

(B) are using the DRIP to lower their current personal tax liability payments, since stock is received rather than cash

(C) prefer a high cash dividend payout policy

(D) place more value on expected dividends than on expected capital gains

The given answer is A. Please provide an explanation of why this answer is the correct choice.