In a World Without Taxes or Transaction Costs, It Can

question 79

Essay

In a world without taxes or transaction costs, it can be argued that dividend policy is irrelevant for shareholder value and cash flow. With a no-dividend policy, the current price is and will remain $100.00 per share. With a high-dividend policy, the current price is $100.00 per share and the value falls to $95 per share upon payment of the dividend.
Use the following example to demonstrate dividend policy irrelevance.

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Definitions:

Consumer Buying Patterns

The study of how individual consumers or groups purchase, use, and dispose of goods and services over time.

Moral Consequences

The ethical outcomes or impacts of a decision or action, especially considered in terms of right and wrong.

Moral

Concerned with the principles of right and wrong behavior, often guiding individuals in making decisions based on ethics and values.

Users

Users refer to individuals or entities that use computer systems, software, or services for performing various tasks or operations.