Everything else equal, if a firm increases the dividend that it pays from $4 to $5:
A. more money will be available to invest in capital budgeting projects.
B. its future growth rate will decrease.
C. demand for the stock will decrease among investors who prefer to receive current income from their investments.
D. the firm should expect many of the investors who held the stock prior to the increase to sell their stock
E. its operating income will increase.
Answer: B
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