Explore BrainMass

Explore BrainMass

    Residual theory of dividends: pay dividends if equity is less than retained earnings?

    Not what you're looking for? Search our solutions OR ask your own Custom question.

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

    According to the residual theory of dividends, if the firm's equity need is less than the amount of retained earnings, the firm would ___________

    borrow to pay the cash dividend,
    declare a dividend equal to the remaining balance,
    pay no cash dividends,
    or not need to consider its dividend policy

    © BrainMass Inc. brainmass.com December 24, 2021, 5:12 pm ad1c9bdddf

    Solution Preview

    The residual theory of dividends says that all positive-NPV projects should be financed with retained earnings ...

    Solution Summary

    The solution presents a response with an explanation. The expert examines the pay dividends if equity is less.