MUMU Limited has generated profits before tax in Australia of $500 million. it pays company tax at a rate of 30%.

(a) what is the main advantage of imputation tax system to shareholders?

(b) how does dividend imputation affect a firm's equity cost of capital, and the weighted average cost of capital WACC (assuming gamma>0)?

(c) assuming paid dividends are fully franked, how many franking credits remain undistributed if MUMU pays 80% of after tax profits as dividends? what is the distribution rate for franking credits?