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eBay Inc. developed a web-based marketplace at www.ebay.com, in which individuals can buy and sell a variety of items. eBay also acquired PayPal , an online payments system that allows businesses and individuals to send and receive online payments securely. In a recent annual report, eBay published the following dividend policy: We have never paid cash dividends on our stock and currently anticipate that we will continue to retain any future earnings for the foreseeable future. Given eBay’s dividend policy, why would investors be attracted to its stock?

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 15, Problem 27E
Textbook Problem
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eBay Inc. developed a web-based marketplace at www.ebay.com, in which individuals can buy and sell a variety of items. eBay also acquired PayPal, an online payments system that allows businesses and individuals to send and receive online payments securely. In a recent annual report, eBay published the following dividend policy:

We have never paid cash dividends on our stock and currently anticipate that we will continue to retain any future earnings for the foreseeable future.

Given eBay’s dividend policy, why would investors be attracted to its stock?

To determine

Explain the interest of investors in investing in Incorporation E, despite the cash dividends are not paid.

Explanation of Solution

Dividend yield: This is the ratio which measures the amount of dividends paid relative to the market price.

Although it is not mandatory for companies to pay dividends as per the law, but many companies maintain a consistent dividend policy...

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Chapter 15 Solutions

Financial Accounting
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