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need C) Lenberg Lens Company believes in the divi...

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need C) Lenberg Lens Company believes in the dividends-as-a-residual philosophy of dividend policy. This year?s earnings are expected to total $10 million. A very conservative company, Lenberg is financed solely with common stock. The required rate of return on retained earnings is 12 percent, whereas the cost of newly raised capital is 14 percent because of issuance costs. What factors, other than its belief in the residual theory of dividends, should Lenberg consider in setting its dividend policy in part b?

 

Paper#8453 | Written in 18-Jul-2015

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