A fast-growing company with many high net present value projects may maximize shareholder wealth by NOT paying a dividend.

Question

Quizplus · Accepted Answer

If the company has many high net present value projects, not paying a dividend would allow them to reinvest the profits back into the company, potentially leading to higher growth and shareholder value in the long term. Additionally, shareholders can benefit from capital gains if the company's value increases due to successful project investments. Therefore, not paying a dividend may be a good strategy for maximizing shareholder wealth.

A Fast-Growing Company with Many High Net Present Value Projects