Question

1. How do the availability and cost of outside capital affect payout (dividend) policy? Which market...

1. How do the availability and cost of outside capital affect payout (dividend) policy? Which market

imperfections lead a cost of outside capital?

2. Explain the logic of the residual payout (dividend) model and the steps a firm would take to

implement it.

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Answer #1

Solution 2

on the above is clear that when dividend payout is zero then retention ratio is 100% and firm also on growing mode and vice verse

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