You are a financial manager that always follows the primary goal of management.

You are a financial manager that always follows the primary goal of management. Which of the following is the optimal Dividend Policy for your firm?

	Capital Budget=$5.3 Million, EPS = $3.24, Debt ratio = 40%, Dividends = $1.00, Firm Value=$45 Million
	Capital Budget=$17 Million, EPS = $3.39, Debt ratio = 60%, Dividends = $0.00, Firm Value=$38 Million
	Capital Budget=$2.9 Million, EPS = $2.95, Debt ratio = 30%, Dividends = $2.00, Firm Value=$43 Million
	Capital Budget=$8.5 Million, EPS = $3.54, Debt ratio = 50%, Dividends = $0.50, Firm Value=$41 Million
	Capital Budget=$4.1 Million, EPS = $3.18, Debt ratio = 30%, Dividends = $1.50, Firm Value=$44 Million

Expert Solution

The prime goal of management is to maximize the firm's value, thus the answer is:-

a) Capital Budget=$5.3 Million, EPS = $3.24, Debt ratio = 40%, Dividends = $1.00, Firm Value=$45 Million

jeff jeffy answered 2 years ago

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