You are a consultant that has been hired to recommend a payout policy for UBT Corp. You have compiled a table with the current tax rates that different types of investors in the stock market face (see table below). Assume that all of UBT's shareholders are investors of Type 2. Given this information, how should UBT structure its payout policy? Select the best one.

I.	The company should only repurchase shares, because the tax rate on capital gains is higher than the tax rate on dividends for this investor type.
II.	The company should only repurchase shares, because the tax rate on dividends is higher than the tax rate on capital gains for this investor type.
III.	The company should only pay dividends, because the tax rate on dividends is higher than the tax rate on capital gains for this investor type.
IV.	The company should only pay dividends, because the tax rate on dividends is lower than the tax rate on capital gains for this investor type.
V.	This investor group will be indifferent between the company paying dividends or repurchasing shares.

\begin{tabular}{|lrr|} \hline Investor Type & Tax Rate on Dividends & Tax Rate on Capital Gains \\ \hline Type 1 & 30% & 10% \\ Type 2 & 20% & 20% \\ Type 3 & 10% & 20% \\ Type 4 & 0% & 0% \\ \hline \end{tabular}