In a World Without Taxes or Transaction Costs,it Can Be

In a world without taxes or transaction costs,it can be argued that dividend policy is irrelevant for shareholder value and cash flow.With a no-dividend policy,the current price is and will remain $100.00 per share.With a high-dividend policy,the current price is $100.00 per share and the value falls to $95 per share upon payment of the dividend.
Use the following example to demonstrate dividend policy irrelevance. $$\begin{array} { | l | l | } \hline \text { No-dividend Policy } & \text { High-dividend Policy } \\\hline 5,000 \text { shares owned } & 5,000 \text { shares owned } \\\hline \$ 100.00 \text { current price per share } & \$ 100.00 \text { current price per share } \\\hline \$ 0.00 \text { dividends per share } & \$ 5.00 \text { dividends per share } \\\hline \$ 25,000 \text { desired cash flow per year } & \$ 25,000 \text { desired cash flow per year } \\\hline\end{array}$$