Instead of paying dividends, the firm may use the cash to repurchase shares of its own stock. Why should Angelina Corporation choose to repurchase its own stock overpayment of dividends? Give three reasons. Angelina Corporation has sufficient cash of $500 million and is considering other alternatives of using the cash rather than using it to pay dividends mainly because of the unfavorable tax treatment of dividends.

Explain four alternatives of using the cash to the board. . i.) Explain the dividend policy theory of clientele effect. ii.) James Robertson and Alicia Walters own stocks in Angelina Corporation. James is a wealthy investor and falls in a high tax bracket whereas Alicia, a widow, is in a low tax bracket. One institutional investor also owns stocks of the company. The institutional investor is a pension fund, so it is tax-exempt and does not pay income taxes. Based on the theory of clientele effect, which of the three investors