In a world without taxes or transaction costs,it can be argued that dividend policy is irrelevant for shareholder value and cash flow.With a no-dividend policy,the current price is and will remain $100.00 per share.With a high-dividend policy,the current price is $100.00 per share and the value falls to $95 per share upon payment of the dividend.
Use the following example to demonstrate dividend policy irrelevance.

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The Answer of In a world without taxes or transaction costs,it can be argued that dividend policy is irrelevant for shareholder value and cash flow.With a no-dividend policy,the current price is and will remain $100.00 per share.With a high-dividend policy,the current price is $100.00 per share and the value falls to $95 per share upon payment of the dividend.
Use the following example to demonstrate dividend policy irrelevance.

In a World Without Taxes or Transaction Costs,it Can Be