Dividend payout ratio

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You are examining the weighted average cost of capital (WACC) for a firm, along with its dividend policy. At the beginning of the year, the firm was at its optimal WACC. The firm had positive net income, no new investments, and a dividend payout ratio of more than one. What do you know?

Group of answer choices

The WACC will decrease, as the firm now has access to less costly debt.

The firm's discount rate for typical projects has gone up, as its equity and debt are now more risky.

The stock price is higher, as the debt/equity ratio is now at its optimum.

The WACC has decreased, as the firm now has relatively more equity in its capital structure.

Reference no: EM133112682

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