- 6 Marks
FM – L2 – Q9 – Financial Policy Decisions
Discuss investment, financing, and dividend policy decisions, their interrelation, and impact on firm value.
Question
When determining the financial objectives of a company, it is necessary to take three types of policy decision into account: investment policy, financing policy, and dividend policy.
Required:
Discuss the nature of these THREE types of decisions, commenting on how they are inter-related and how they might affect the value of the firm (that is the present value of projected cash flows).
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