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Question
Grainery Distillers, Inc. is experiencing high demand for its products and high growth rates. The company just reported earnings per share of $5 for the most recent year and has many positive NPV projects to fund. One vice president wants to pay a dividend of $5 per share, arguing that this will maximize shareholder value. You argue that a much smaller dividend will maximize value. Your argument may be based onA) the bird-in-the-hand theory.
B) the residual dividend theory.
C) the information effect.
D) the very high agency costs of the corporation.
Answer
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