Miller and Modigliani proclaim that,under certain ideal conditions,dividend policy is irrelevant.What is it that they are specifically proclaiming to be irrelevant? Explain with the following example.Assume that a firm has $100,000 in assets at market value,no debt,and 100 shares outstanding.Further,$10,000 of the assets are in cash which represents the recent net income of the firm.Now the firm can choose whether to pay out,say,a 50% dividend which will necessitate the issuance of $5,000 in new shares,or to pay no dividend and plow back all $10,000 of earnings into a project with an attractive NPV.

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The Answer of Miller and Modigliani proclaim that,under certain ideal conditions,dividend policy is irrelevant.What is it that they are specifically proclaiming to be irrelevant? Explain with the following example.Assume that a firm has $100,000 in assets at market value,no debt,and 100 shares outstanding.Further,$10,000 of the assets are in cash which represents the recent net income of the firm.Now the firm can choose whether to pay out,say,a 50% dividend which will necessitate the issuance of $5,000 in new shares,or to pay no dividend and plow back all $10,000 of earnings into a project with an attractive NPV.

Miller and Modigliani Proclaim That,under Certain Ideal Conditions,dividend Policy Is