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# The Akins ditch-digging firm has $2,000 of extra cash. Brian, the CFO, is thinking about what to do with the money.

The Akins ditch-digging firm has $2,000 of extra cash. Brian, the CFO, is thinking about what to

do with the money. He can put it into treasuries for three years currently yielding 6% or pay it

out to shareholders now. Of course, shareholders themselves also have access to the treasury

market. Most of the equity investors in Rountree ditch-digging are poor and pay only a 15%

personal tax rate. The maximum tax rate on dividends is 18%. The corporate tax rate is 32%.

How much money will shareholders have after 3 years under each of Brian's alternatives and

what should he do?