The residual dividend theory suggests that: a.Firms should pay dividends only if the net income is higher than firm capital needs b.Dividends should be paid if Net Income -Debt Ratio*Capital Budget is positive c.Dividend should be paid if Net Income - % Equity in Capital Structure*Capital Budget is greater than zero d.Dividends should be paid on the basis of a constant payout ratio e.Dividends should be paid if free cash flows to the firm are positive

The lingering hypothesis, proposes that the profit paid by a firm is seen as a remaining, for…

Answered: The residual dividend theory suggests…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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The residual dividend theory suggests that:

	a.	Firms should pay dividends only if the net income is higher than firm capital needs
	b.	Dividends should be paid if Net Income -Debt Ratio*Capital Budget is positive
	c.	Dividend should be paid if Net Income - % Equity in Capital Structure*Capital Budget is greater than zero
	d.	Dividends should be paid on the basis of a constant payout ratio
	e.	Dividends should be paid if free cash flows to the firm are positive

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