Makersbury has total cash available of $1 million, but decides to match last year's dividend payout of $1.5 million.If the company raises the extra $500,000 by selling share, the decision to pay out more than its available cash in dividends should
A)cause the share price to increase.
B)have no effect on the value of the share.
C)cause the share price to decrease.
D)None of these options: a company cannot use money raised by selling share to pay a dividend to existing shareholders.

Question

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The Answer of Makersbury has total cash available of $1 million, but decides to match last year's dividend payout of $1.5 million.If the company raises the extra $500,000 by selling share, the decision to pay out more than its available cash in dividends should
A)cause the share price to increase.
B)have no effect on the value of the share.
C)cause the share price to decrease.
D)None of these options: a company cannot use money raised by selling share to pay a dividend to existing shareholders.

Makersbury Has Total Cash Available of $1 Million, but Decides