Question
Q1. As the financial manager of firm Mini, you are analyzing the dividend policy of the firm. You find that firm Mini can either pay
Q1. As the financial manager of firm Mini, you are analyzing the dividend policy of the firm. You find that firm Mini can either pay out dividends of $2 per share every year for each of the next two years or can pay $1 per share in one year, reinvest the other $1 per share into the firm and then pay $3.1 per share in two years. Investors require a 10% return. Show your work when comparing the two dividend policy options and discuss the conclusion you got. Assuming that the second dividend is a liquidating dividend and the firm has 100,000 shares outstanding. (4)
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