How do personal taxes affect an investors preference

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Reference no: EM13319265

a. What are the potential advantages and disadvantages to a company's shareholders if the company increases the proportion of debt in its capital structure?

b. How do personal taxes affect an investor's preference for high versus low dividend yields?

Source: Adapted from Introduction to Corporate Finance, Second Edition, Booth and Cleary, 2010, John Wiley & Sons Canada, Ltd., Chapter 22, Practice Problem 14, page 906.

Reproduced with permission from John Wiley & Sons Canada, Ltd.c. There is evidence that suggests that dividends have a more stable pattern than earnings. What type of dividend policy is management adopting if it decides to pay a stable dividend in the face of fluctuating earnings, and why might they do so?

Reference no: EM13319265

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