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while captive inc. has been in business over 50 years, newly developed products

ID: 2664406 • Letter: W

Question

while captive inc. has been in business over 50 years, newly developed products pushed the firms 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 polices / procedures would you consider best under the circumstances?

a- substitute a stock dividend for the current cash dividend
b- borrow long term to pay the current dividend
c- enter into a long term stock repurchase program
d- look seriously for a merger partner

Explanation / Answer

(a) Substitute a stock dividend for the current cash dividend Substitute a stock dividend for the current cash dividend is the best or procedure to the company the right option is (a) Substitute a stock dividend for the current cash dividend