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Problem 19-20 Dividends versus ReinvestmentAfter completing its capital spending for the year, CarlsonManufacturing has $2,200 extra cash. The company’s managers mustchoose between investing the cash in Treasury bonds that yield 6percent or paying the cash out to investors who would invest in thebonds themselves. a.If the corporate tax rate is 30 percent, what personal tax ratewould make the investors equally willing to receive the dividend orto let the company invest the money? (Do not roundintermediate calculations. Enter your answer as a percent roundedto the nearest whole number, e.g., 32.) Personal tax rate% b.Is the answer to (a) reasonable?YesNo c.Suppose the only investment choice is a preferred stock thatyields 12 percent. The corporate dividend exclusion of 70 percentapplies. What personal tax rate will make the stockholdersindifferent to the outcome of the company’s dividend decision?(Do not round intermediate calculations and enter youranswer as a percent rounded to 2 decimal places, e.g.,32.16.) Personal tax rate% d.Is this a compelling argument for a low dividend payoutratio?YesNo