A residual dividend policy is one in which

Question

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In a residual dividend policy, residual funds or leftover funds are paid out to the shareholders as dividends after fulfilling all the capital expenditures and meeting the necessary cash requirements of the company. The company first invests in profitable projects and retains some earnings for future investments. Then the remaining funds are paid out as dividends to shareholders. This policy helps companies to avoid taking on external borrowing to maintain dividend payments.

A Residual Dividend Policy Is One in Which