equity: Reading 43: page 463 q13: FCFE and dividend policy investment, financing, company, equity, policy

mp3bu

answer to q13.c said that “FCFE model explicilty recognizes the company’s investment and financing policies as well as its dividend policy”. I don’t really get how FCFE recognize copmany’s dividend policy…… any advice/ Thanks.

koba

Well suppose FCFE = Dividends, if the firm pays all its FCFE as dividends, so it gives you an idea of what % of FCFE they are holding on too, and that to which they are returning to shareholders