Which of the following would cause dividends to decrease if the firm was using the residual dividend model?

Name: Which of the following would cause dividends to decrease if the firm was using the residual dividend model?
Brand: Quizplus
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Question

Quizplus · Accepted Answer

In the residual dividend model, dividends are paid out from the residual or leftover equity after all positive NPV projects are funded. If net income decreases, there is less residual income available for dividends, leading to a decrease in dividends.

Which of the Following Would Cause Dividends to Decrease If