Which of the Following Would Cause Dividends to Increase If

question 76

Multiple Choice

Which of the following would cause dividends to increase if the firm was using the residual dividend model?

• A) The firm has less positive NPV projects.
• B) The firm uses more debt in its capital structure.
• C) Net income increases.
• D) All of the options would cause dividends to increase.

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Definitions:

Salvage Value

The projected remaining value of an asset following its operational lifespan, once depreciation or amortization has been taken into account.

Recoverable Ore

The portion of ore that can be economically and technically extracted or produced at a profit.

Depletion

The allocation of the cost of natural resources over their useful life, used in accounting to match the expense of extracting natural resources with the revenue generated from them.

Machinery Installation

The process of setting up and configuring industrial machinery in a specific location for operational use.