While company \"C\", Inc. has been in business for over 50 years, newly develope

Question

While company "C", Inc. has been in business for over 50 years, newly developed products pushed the firm's year-over-year growth rate to 35% during the latest three years. The firm is proud of its history of paying dividends, but the vigorous recent growth of the firm has left it cash challenged. Which of the following policies/procedures would you consider the best under the circumstances? A. Busstitute a stock dividend for the current cash dividend OR B. Borrow long-term to pay the current dividend OR C. Enter into a long-term stock repurchase program OR D. Look seriously for a merger partner.

Explanation / Answer

In the given case, the firm has low level of cash balance and the firm wants to pay dividend, so the firm can use stock dividend as the best alternative of cash dividend. Thus, the correct answer is option c.

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