MM's Dividend Irrelevance Theory Says That While Dividend Policy Does

question 44

True/False

MM's dividend irrelevance theory says that while dividend policy does not affect a firm's value, it can affect the cost of capital.

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Definitions:

Period Cost

Costs that are not directly tied to the production process and are expensed in the period in which they are incurred, such as selling, general, and administrative expenses.

Factory Equipment

The machinery and tools used in the process of manufacturing goods, often considered as fixed assets in accounting.

Depreciation

The systematic allocation of the depreciable amount of a fixed asset over its useful life, representing the asset's wear and tear, deterioration, or obsolescence.

Product Cost

Refers to the total expenses incurred to manufacture a product, including direct labor, direct materials, and manufacturing overhead.