Question
Now suppose that the company has an option to engage in projects that generate a return on investments of 14%. Which of the following statements
Now suppose that the company has an option to engage in projects that generate a return on investments of 14%. Which of the following statements is true about the value of the company? The value of the company will not be affected by the dividend and earnings payout ratio.
The company can increase its value by decreasing its plowback ratio.
The company can increase its value by increasing its earnings retention ratio.
The company can increase its value by increasing its dividend payout ratio.
If the company decides to decrease its dividend payout ratio, its share price should fall.
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