The Dividend Policy Must Be Formulated Considering Two Basic Objectives

question 36

Multiple Choice

The dividend policy must be formulated considering two basic objectives, namely ________.

• A) delaying the tax liability of the stockholder and information content
• B) maximizing shareholder wealth and maintaining liquidity
• C) maximizing shareholder wealth and providing for sufficient financing
• D) maintaining liquidity and minimizing the weighted average cost of capital

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Definitions:

Double-declining-balance Method

An accelerated depreciation method that doubles the depreciation expense compared to the straight-line method.

Depreciation Expense

Systematically dividing the expense of a tangible asset over the period it remains useful.

Scrap Value

The estimated worth of an asset's materials when the asset is deemed no longer useful and is intended to be disposed of or recycled.

Straight-line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its expected useful life.