Consider the importance of selecting the right projects in which to invest capital. Do we always select those projects that have the highest return on investment? If not can whoever answers explain? What other factors other than highest return play into the capital budgeting decision? I considered available funds things like that but if you could elaborate.

Also looking at a dividend policy, what benefit or incentive do companies have to actually pay dividends? Lastly does having a dividend policy provide a signal to investors?