Which is, quite simply, a maximum dividend coverage will have to be dependent on this new relationship of r and k

M-Yards hypothesis assumes one taxes do not are present, in fact, it’s impossible. To the contrary, this new shareholders need to pay taxation to the dividend so acquired or towards capital increases. We realize you to definitely different tax costs can be applied so you’re able to dividend and you can capital progress and you may income tax rate for the investment progress is relatively reasonable compared to tax speed to the dividend.

In short, the cost of interior money are less as compared to prices off outside funding. Continue reading “His proposition clearly says the connection within firms’ (i) inner speed of return (i” →