单选题 Which of the following statements regarding the value of the firm is most accurate? A. A company's legal and treasury departments act to reduce the tax rate from 37.5% to 37.0% , the value of the firm will increase. B. The government engages in a restrictive monetary policy and the expected inflation rate decreases, the P/E ratio will decrease. C. The board of directors increases the dividend payout ratio, the value of the company will increase.

【正确答案】 A

【答案解析】
A decrease in the tax rate would increase the company's EPS and thus would increase the value of the fill. (The equation for EPS includes the term (1-t).). Increase in the dividend payout would decrease earnings retention, the P/E ratio would fall. Because earnings retention impacts both the numerator (dividend payout) and denominator (g) of the P/E ratio, the impact of a change in earnings retention depends upon the relationship of ke and ROE. If the company is earning a higher rate on new projects than the rate required by the market ( ROE＞k_e), investors will likely prefer that the company retain more earnings. The expected inflation rate is a component of k_e. k_e can be represented by the following: nominal risk-free rate+stock risk premium, where nominal risk-free rate=[(1+real risk-free rate)(1+expected inflation rate)]-1. If the rate of inflation decreases, the nominal risk-free rate will decrease, ke will decrease. The spread between k_e and g, or the P/E denominator, will decrease. P/E ratio will increase.