A firm that has traditionally paid 70% of its earnings out in dividends has identified some projects that are almost certain to lead to substantial growth but require a great deal of cash. Management wants to raise the money by selling stock and suspending dividend payments. Comment on this idea. (Hint: Do the two actions taken together create a problem?)

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The Answer of A firm that has traditionally paid 70% of its earnings out in dividends has identified some projects that are almost certain to lead to substantial growth but require a great deal of cash. Management wants to raise the money by selling stock and suspending dividend payments. Comment on this idea. (Hint: Do the two actions taken together create a problem?)

A Firm That Has Traditionally Paid 70% of Its Earnings