Your firm adheres strictly to the residual dividend model. All else equal, which of the following...

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Your firm adheres strictly to the residual dividend model. All else equal, which of the following factors would be most likel

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Answer 1

Answer #1

The correct answer is Option-B: The firm's net income increases.

.

Reason:

The Residual Dividend Model first uses earnings to finance new projects, then distributes the remainder as dividends.So, if all other things are kept constant , increase in net income will increase firm's dividend per share under Residual Dividend Policy.

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Answer 2

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Your firm adheres strictly to the residual dividend model. All else equal, which of the following...