Question $7(2\mathrm{.}5$ points$)$

Which of the following should not influence a firm's dividend policy decision?

A$)$ A strong preference by most shareholders for current cash income versus capital gains.

B$)$ Constraints imposed by the firm's bond indenture.

C$)$ The fact that much of the firm's equipment has been leased rather than bought and owned.

D$)$ The fact that Congress is considering changes in the tax law regarding the taxation of dividends versus capital gains.

E$)$ The firm's ability to accelerate or delay investment projects.

Question $8(2\mathrm{.}5$ points$)$

Which of the following would lead to an increase in a firm's dividend payout ratio?

A$)$ Its access to the capital markets decreases.

B$)$ Its R&D efforts pay off, and it now has more high$-$return investment opportunities.

C$)$ Its accounts receivable increase due to a change in its credit policy.

D$)$ Its earnings become more volatile.

E$)$ None of the above