Rather than raising money through debt or equity, your CEO suggests cutting dividends to $2.50 next year to finance the project. This would save the company 800,000 * $2.50 = $2 million, fully funding the project. You know that your company has had a policy of increasing dividends by a growth rate of 3% for the last 20 years. What would you say about this suggestion?

Answer rating: 100% (QA)

1 Impact on Shareholders Reducing dividends may negatively impact shareholders who rely on dividend ... View the full answer