please answer b and c (unit name cooperate financial management

maining Time: 36 minutes, 54 seconds. Uni Mail W/ MyWestern ()Whatsapp Terant Home Aloose. Login uestion Completion Status: estion 5 (Your results should be at least up to 4 decimal places) 10 points = 6 marks) (a) Does following the residual theory of dividends lead to a stable dividend? Contrast the basic arguments about dividend policy advanced by Miler and Mor plan and by Gordon and Untres. (2+4 (b) Explain briefly how the imputation system of dividend payment removes the double taxation of dividends. (2 marks) (c) Suppose a company pays out fully franked dividends of $120 each to investors with marginal tax rates of 35%%. The statutory company tax rate is 30%. Calculate the net tax payable of the refund as the case may be. (2 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 14px a) Dividned Policy is the policy used by a company to decide how much it will pay out to shareholders in dividends. Miller and Modigiani theory states that dividend policy of a firm doesnt affect its value. Shareholders or investors are concerned about the future capital gains rather than a smal dividend dollar amount. If an investor needs money they can always sell a part of their investment and if they don't need money they will reinvest that dividend amount into the firm. So all in all investors don't care about dividend. Also when a firm pays dividend, Its share price drops so the gain from dividend is cancelled out the drop in share price. This theory seems fine to risk loving investors however it doesn't tale into account tre future masks, taxes and other costs. Gordon and Lintner said that investors do care about the dividend they expect to recieve in present rather than a promise of future capital gains. Investors are risk averve and they believe they should take what they can get now in the form of dividends. Hence dividned policy does affect the value of a firm for an investor according to this theory. b)