A large mature company with limited growth opportunities (positive NPV projects) achieved abnormally high profits...

Vendor: AFP
Product: CTP
Update on: Oct 21, 2025
Questions: 1076

AFP CTP Question Answer

A large mature company with limited growth opportunities (positive NPV projects) achieved abnormally high profits this year. After paying mandatory principal, interest, and taxes, the company has $200 million in surplus cash on hand. Assuming its investor base is most concerned with capital appreciation, which of the following is the BEST option for the company?

Declare a special dividend.

Reinvest cash into the company.

Declare a cash dividend.

Repurchase shares of outstanding stock.