Answer:
b. no dividends to common stockholders.
Explanation:
To the extent that the net cost of debt is greater than the opportunity cost of the investor. The company must work with a reduced debt / capital ratio, that is, borrow as little as possible. This reflection is possible to the extent that investors have sufficient equity capital. In any case, when financing a company with a relatively high debt / equity ratio, shareholders tend to sacrifice their dividends in cash, capitalize their profits to allow the business to accelerate the amortization of their debt, or seek other financing options that allow replacing expensive debt with cheap financing.
Answer:
b. no dividends to common stockholders.
Explanation:
The residual dividend policy is a type of dividend policy based on paying dividends out of the remaining internally generated funds after current period capital expenditure has been financed. This makes dividend payments uncertain.
If all earnings are used then common shareholders won't be paid that period
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