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

Question

Quizplus · Accepted Answer

The residual dividend model calculates dividends paid as the leftover or "residual" earnings after all operational and investment expenses are covered, including funding positive NPV projects. Thus, having more positive NPV projects (A), using less debt (B), and a decrease in net income (C) would all lead to less available earnings for dividends, causing them to decrease.

Which of the Following Would Cause Dividends to Decrease If