Question 1 please do fast As soon as possible all three subpart of questiona. What is the optimal dividend policy with taxes when the dividend tax rate exceeds thecapital gain tax rate?b. Why does dividend payout have a tax disadvantage even when dividend tax rate equalsthe capital gain tax?c.What is a dividend clientele effect? If all equity holders in a firm are long term investors,what is the optimal dividend policy based on the dividend clientele effect theory?

Capital gain tax refers to the tax or mandatory charged levied by the government over the profit…

Answered: What is the optimal dividend policy…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

what is the shareholder's total rate of return?
Indicate whether the following statements are true or false. If the statementis false, explain why.f. If a firm follows a residual dividend policy then, holding all else constant, its dividend payout will tend to rise whenever the firm’s investment opportunities improve.
What did Modigliani and Miller assume about taxes and brokeragecosts when they developed their dividend irrelevance theory?
Dividend policy and company value: You have just encountered two identical companies with identical investment opportunities, as well as the ability to fund these opportunities. You have found that one of the companies has just announced an introductory dividend policy, whereas the other has continued with a no-dividend policy. Which of the two companies is worth more? Explain
Dividend policy may be affected by firm level as well as macroeconomic level factors. Select FIVE variables (at least 2 firm-level factors/variables and at least 2 macroeconomic factors/variables) from the list shown below. Explain and discuss the predicted impact of selected factors on dividend policy using relevant theories. i.e. what theories help to predict the positive or negative impact on the dividend payout and why. FIRM-LEVEL FACTOR/VARIABLE Asset growth rate Positive NPV investment opportunities Capital intensity of the production process Free cash flow generated Number of individual shareholders Relative tightness of ownership coalition Size of largest block holder MACROECONOMIC FACTOR/VARIABLE Transaction costs of security issuance Personal tax rates on dividend income Personal tax rates on capital gain Importance of institutional investors Corporate governance power of institutional investors Capital market, relative to intermediated (bank) financing
Discuss the Modigliani and Miller theory. What did Modigliani and Miller assume about taxes and brokerage costs when they developed their dividend irrelevance theory? Discuss the bird - in - hand theory of dividends. How did the bird - in - hand theory get its name? What have been the results of the empirical tests of the dividend theories?
Which of the following will increase the WACC for a tax-paying company? Decrease the proportion of equity financing Decrease the proportion of debt financing Decrease the market value of the equity Increase the market value of the debt
Assume that the tax on dividends and the tax on capital gains is the same. All else equal, what would a prudent investor prefer? A. More information is needed. B. The prudent investor would prefer dividends—a dollar today is always worth more than a dollar to be received in the future. C. The prudent investor would be indifferent between receiving dividends or capital gains. D. The prudent investor would prefer capital gains—the capital gain tax liability can be deferred until gains are realized.
Managers should ideally strive to maximise O a Earnings per share Ob Market price per share Oc Return on equity Od Profit after tax
Please answer
How would an increase in corporate taxes tend to affect an average firm’s capitalstructure? What about an increase in the personal tax rate?
Jose and his friend invest in a machine for their business that costs P1,200,000.00. The machine has an economic life of 10 years and has a salvage value of P110,000.00. what is the book value on 6th year. Use the SYD method

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS