Grainery Distillers, Inc is experiencing high demand for its products and high growth rates. The
company just reported earnings per share of $5 for the most recent year and has many positive
NPV projects to fund.
One vice president wants to pay a dividend of $5 per share, arguing that this
will maximize shareholder value. You argue that a much smaller dividend will maximize value.
Your argument may be based on
A) the information effect.
B) the very high agency costs of the corporation.
C) the residual dividend theory.
D) the bird-in-the-hand theory.
C
Business
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Fill in the blank(s) with the appropriate word(s).
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