Positive NPV Projects Enhance Shareholder Wealth

question 250

Essay

Positive NPV projects enhance shareholder wealth. However, in some cases the payment of
dividends limits the number of positive NPV projects a firm can take. Why, then, shouldn't
shareholders prefer a residual dividend policy?

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Definitions:

Role Ambiguity

A situation in which the expectations of a role are unclear, leading to uncertainty and difficulty in fulfilling the role effectively.

Job Demands

The physical, psychological, social, or organizational aspects of a job that require sustained physical and/or mental effort.

Labour Costs

The total expenditure borne by employers to compensate their workforce, including wages, benefits, and taxes.

Role Overload

A situation where an individual is expected to fulfill too many roles or tasks within a limited time frame, often leading to stress and reduced performance.