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10. Payout Policy. Constancash, Inc. is expected to pay dividends of $2.20 per year for the next ten years, with the first cash flow occurring immediately. (That is, there will be a total of eleven cash flows over the next ten years.) The fair rate of return on Constancash's stock is 15 percent. Ignore all market imperfections except personal taxes on dividends.
a. What is the value of one share of Constancash assuming a tax rate of 0 percent?
b. How much would you expect the value of a share of this stock to fall on the day it goes ex-dividend, assuming all investors face a tax rate of 0 percent?
c. How much would you expect the value of a share of this stock to fall on the day it goes ex-dividend, assuming all investors face a tax rate of 30 percent?
d. Suppose half of the investors in Constancash face a tax rate of 10 percent, and half of the investors face a tax rate of 30 percent. How much would you expect stock price to fall on the day the share goes ex-dividends

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