Use the Following Information to Answer the Question(s)below

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that all capital gains are taxed at a 20% rate,and that the dividend tax rate is 40%.Rearden Metal is currently trading for $40 per share,and is about to pay a $5 special dividend.
-Suppose that Rearden Metal made a surprise announcement that it would do a share repurchase rather than pay a special dividend.The net tax savings per share for an investor that would result from this decision is closest to:

A) $1.25.
B) $3.75.
C) $4.00.
D) $5.00.