$32.($LO $22\mathrm{.}3)$ CGC Company is considering its dividend policy. Currently CGC pays no dividends, has cash flows from operations of $$10$ million per year $($perpetual$),$ and needs $$8$ million for capi$-$ tal expenditures. The firm has no debt and there is no tax. The firm has $2$ million shares outstanding, which are currently trading at $$50$ per share. George, the majority owner of CGC $($he owns $60$ percent$).$ would like to take $$20$ million out of the company to fund his var$-$ ious charities. You have been hired by CGC to consider different alternatives.

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i$.$ George could sell stock to the market to raise the $$20$ million he requires. What are the advantages and disadvantages of this strategy $($i$.$e$.,$ the impact on the value of CGC and George's control$)?$

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ii$.$ CGC could pay a dividend so that George receives the $$20$ million.

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a$.$ Describe how the company can issue stock to create the dividend.

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b$.$ What is the effect on the value of CGC and on George's control of the firm?