Which of the following statements is false?
a. when a firm pays a dividend, shareholders are taxed according to the dividend tax rate. if the firm repurchases shares instead, and shareholders sell shares to create a homemade dividend, the homemade dividend will be taxed according to the capital gains tax rate.
b. when the tax rate on dividends exceeds the tax rate on capital gains, shareholders will pay lower taxes if a firm uses share repurchases for all payouts rather than dividends.
c. the optimal dividend policy when the dividend tax rate exceeds the capital gain tax rate is to pay no dividends at all.
d. firms that use dividends will have to pay a lower after-tax return to offer their investors the same pre-tax return as firms that use share repurchases.

The monthly demand equation for an electric utility company is estimated to be p equals 60 minus left parenthesis 10 superscript negative 5 baseline right parenthesis x, where p is measured in dollars and x is measured in thousands of killowatt-hours. the utility has fixed costs of $3 comma 000 comma 000 per month and variable costs of $32 per 1000 kilowatt-hours of electricity generated, so the cost function is upper c left parenthesis x right parenthesis equals 3 times 10 superscript 6 baseline plus 32 x. (a) find the value of x and the corresponding price for 1000 kilowatt-hours that maximize the utility's profit. (b) suppose that the rising fuel costs increase the utility's variable costs from $32 to $38, so its new cost function is upper c 1 left parenthesis x right parenthesis equals 3 times 10 superscript 6 baseline plus 38 x. should the utility pass all this increase of $6 per thousand kilowatt-hours on to the consumers?