1. Which of the following statements is FALSE?
A. A firm can only pay out its earnings to investors or reinvest their earnings.
B. Successful young firms often have high initial earnings growth rates.
C. Estimating dividends, especially for the distant future, is difficult.
D. According to the constant dividend growth model, the value of the firm depends on the current dividend level, divided by the equity cost of capital plus the growth rate.
2. Which of the following is NOT a method by which a company can increase its dividend payments? Please show work
A. It can increase its earnings.
B. It can increase its dividend payout rate.
C. It can issue more shares.
D. It can decrease the number of shares outstanding.