Question

SchoolStreet expects to earn $6.0 million next year. Forty percent of this amount, or $2.4 million, has been allocated for distribution to common shareholders. There are 2.4 million shares outstanding and the market price is $30 a share. Caleb believes that company can either use the $2.4 million to repurchase shares at the current price of $30 per share or else pay a cash dividend of $1.00 per share. Caleb was wondering which of the following is least likely to have an influence on the optimal dividend policy? A. The possibility of accelerating or delaying investment projects. B. A strong shareholders' preference for current income versus capital gains C. A new Chief Financial Officer (CFO) is announced to replace the former CFO. D. The costs associated with selling new common stock.

          SchoolStreet expects to earn $6.0 million next year. Forty percent of this amount, or $2.4 million, has been allocated for distribution to common shareholders. There are 2.4 million shares outstanding and the market price is $30 a share. Caleb believes that company can either use the $2.4 million to repurchase shares at the current price of $30 per share or else pay a cash dividend of $1.00 per share.

Caleb was wondering which of the following is least likely to have an influence on the optimal dividend policy?

A. The possibility of accelerating or delaying investment projects.
B. A strong shareholders' preference for current income versus capital gains
C. A new Chief Financial Officer (CFO) is announced to replace the former CFO.
D. The costs associated with selling new common stock.

SchoolStreet expects to earn 6.0 million next year. Forty percent of this amount, or2.4 million, has been allocated for distribution to common shareholders. There are 2.4 million shares outstanding and the market price is 30 a share. Caleb believes that company can either use the2.4 million to repurchase shares at the current price of 30 per share or else pay a cash dividend of1.00 per share.

Caleb was wondering which of the following is least likely to have an influence on the optimal dividend policy?

A. The possibility of accelerating or delaying investment projects.
B. A strong shareholders' preference for current income versus capital gains
C. A new Chief Financial Officer (CFO) is announced to replace the former CFO.
D. The costs associated with selling new common stock.

Added by Liana A.

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