The Residual Dividend Theory Suggests That Dividends Will Only Be

question 133

Multiple Choice

The residual dividend theory suggests that dividends will only be paid

• A) if the tax rate on capital gains is higher than the tax rate on dividends.
• B) if the corporation has more positive NPV projects than it can fund.
• C) if interest rates available to shareholders are higher than the required return on the company's stock.
• D) if current retained earnings exceed the equity portion of the firm's capital budget.

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