Answered: 1. Dividend is a financing decision as…

1. Dividend is a financing decision as well as distribution of earnings. Do you agree with the statement? Justify howdoes dividend affect the value of the firm?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter11: Risk-adjusted Expected Rates Of Return And The Dividends Valuation Approach

Section: Chapter Questions

Problem 9QE

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Question

1. Dividend is a financing decision as well as distribution of earnings. Do you agree with the statement? Justify howdoes dividend affect the value of the firm?

2. Compare the effect of distribution of dividends and retained earnings on the value of the firm.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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Dividend is a financing decision as well as distribution of earnings. Do you agree with the statement? Justify how does dividend affect the value of the firm? Compare the effect of distribution of dividends and retained earnings on the value of the firm.
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