Which of the following should not influence a firm's dividend policy decision?
A) A strong preference by most shareholders for current cash income versus capital gains.
B) Constraints imposed by the firm's bond indenture.
C) The fact that much of the firm's equipment has been leased rather than bought and owned.
D) The fact that Congress is considering changes in the tax law regarding the taxation of dividends versus capital gains.
E) The firm's ability to accelerate or delay investment projects.

Question

Quizplus · Accepted Answer

The fact that much of the firm's equipment has been leased rather than bought and owned should not influence the firm's dividend policy decision. This is because whether equipment is leased or owned does not affect the firm's ability to pay dividends.

Which of the Following Should Not Influence a Firm's Dividend