Reynolds Paper Products Corporation Follows a Strict Residual Dividend Policy

question 1

Multiple Choice

Reynolds Paper Products Corporation follows a strict residual dividend policy.All else equal, which of the following factors would be most likely to lead to an increase in the firm's dividend per share?

• A) The company increases the percentage of equity in its target capital structure.
• B) The number of profitable potential projects increases.
• C) Congress lowers the tax rate on capital gains.The remainder of the tax code is not changed.
• D) Earnings are unchanged, but the firm issues new shares of common stock.
• E) The firm's net income increases.

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