Suppose that there are just three types of investors with the following tax rates:

IndividualsCorporationsInstitutionsDividends35%20%0%Capital gains1880

Individuals invest a total of $81.5 billion in stock and corporations invest $11.80 billion. The remaining stock is held by the institutions. All three groups simply seek to maximize their after-tax income.

These investors can choose from three types of stock offering the following pretax payouts per share:

Low PayoutMedium PayoutHigh PayoutDividends$8$8$35Capital gains1880

These payoffs are expected to persist in perpetuity. The low-payout stocks have a total market value of $101.5 billion, the medium-payout stocks have a value of $51.5 billion, and the high-payout stocks have a value of $121.5 billion.

a.Suppose that this marginal group of investors requires an after-tax return of 12%. What are the prices of the low-, medium-, and high-payout stocks?(Do not round intermediate calculations.Round your answers to 2 decimal places.)

Price of low-payout stock$Price of medium-payout stock$Price of high-payout stock$

b.Calculate the after-tax returns of the three types of stock for each investor group.(Do not round intermediate calculations. Round your answers to 2 decimal places.)

InstitutionsIndividualsCorporationsLow-payout stock%%%Medium-payout stock%%%High-payout stock%%%

c.What are the dollar amounts of the three types of stock held by each investor group?(Leave no cells blank - be certain to enter "0" wherever required. Round your answers to 2 decimal places.)

InstitutionsIndividualsCorporationsLow-payout stock$$$Medium-payout stock$$$High-payout stock$$$