Explore BrainMass

Explore BrainMass

    Evaluating Dividend Policy on Wealth Maximization

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Can you please tell me what is Evaluating Dividend Policy on Wealth Maximization in businesses?

    © BrainMass Inc. brainmass.com December 15, 2020, 2:38 pm ad1c9bdddf

    Solution Preview

    First, let's define some terms:

    Dividends are a distribution of profits from a corporation to the owners (shareholders).

    Dividends decrease the net asset value of a corporation, and cause the double-taxation problem (they are not deductible by the corporation, but are taxable by the individual.)

    Dividend policy is a decision of the management or Board of Directors about how much to pay out of a corporation to its owners (shareholders) in dividends.

    Wealth maximization has to do with how much of the profits should be retained inside the corporation to be used to maximize future profits of the ...

    Solution Summary

    The solution first defines the terms presented in the statement. Following five definitions are three issues associated with the dilemma facing corporations in establishing a dividend policy that is acceptable to all.