In your class, divide into small groups. Assume the president of a small company that has been profitable for several years but has not paid a dividend has hired your group. The company has built up a cash reserve. It has 20 stockholders, but the president owns 40 percent of the company’s shares. Several of the stockholders with smaller numbers of shares would like to sell their shares, but there is no ready market. The president of the company has asked your group to determine whether it would be better to recommend to the board of directors that they pay a dividend to all stockholders or whether they should buy out the smaller stockholders to hold in the treasury shares and possibly retire them. In your group, decide which recommendation you will make to the president. Develop a series of points to support your argument. Participate in a class debate among teams who have chosen opposing positions.

Business Communication Case Debt or Equity Financing