P 17-12 (similar to) Question Help Clovis Corporation has $56 million in cash 10 million shares outstanding, and a current share pike of $35. Clovixis deciding whether to use the $56 million to pay in immediate special dividend of $5.00 per share, or to retain and investit at the risk free rate of 10% and use the $56 million in interest earned to increase its regular annual dividend of $0 56 por share. Assume perfect capital markets a. Suppose Clovex pays the special dividend How can a shareholder who would prefer an increase in the regular dividend croato it on her own? b. Suppose Clivix increases its regular dividend How can a shareholder who would prefer the special dividend create it on her own? a. Suppose Clovis pays the special dividend How can a shareholder who would prefer an increase in the regular dividend create it on her own? (Select the best choice below) 1) V1) (0/1) DA Invest the $5.60 special dividend and eam interest of 0.56 per year O B. Borrow $500 today and use the increase in the regular dividend to pay the interest of so 56 per year on the loan O.C. Sila share of Clovix stock for $35 today and invest the proceeds to eam $3 50 in interest OD Borrow $35 today and use it to buy a share of Clovex stock 0/1) 0/1) 0/1) P 17-13 (similar to) Question Help You mariage a (tax-free) pension fund that is invested in KOA Corporation KOA's managers have just announced that they unexpectedly generated an extra 555 million in cash flow this year. They are considering paying it out now as a special dividend or investing it in one year Treasury securities that will earn 10% interest over the next year they would then distribute the $55 million plus interest oamed as a special dividend. If KOA pays a 21% corporate tax rate, would you prefer they pay the $55 million as a special dividend now or wait a your? 11 KOA pays the special dividend immediately, you can then choose to invest in the same one-year Treasury securities and eam Smiton (Round to two decimal places) 1) 0/1) 0/1 11