October 20th, 2020 
Do you agree or disagree with the following statements? Briefly explain why.
(a) In a world of no corporate or personal taxes, no agency costs or information asymmetries, a lower dividend payout will reduce a firms cost of capital.
(b) Unlike new capital, which needs a stream of new dividends to service it, retained earnings have zero cost.
(c) If a company repurchases stock instead of paying a dividend, the number of shares falls and earnings per share rise. For this reason alone, stock repurchase must always be preferred to paying dividends.
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