Step 1 Read the scenario. Assume your firm has never distributed cash to its shareholders. However, now you are trying to determine the appropriate way to distribute some cash that is consistent with maximizing shareholder wealth. To clarify your thoughts you will draft a short paper. Step 2 Write a paper. Write a 250-word paper using information presented in the scenario to help answer the following questions: Why would a dividend distribution be important? What type of dividend policy should you adopt? List at least two options. What factors impact the dividend policy decision? Would a stock split or a stock dividend suffice?
Sample Solution
