Which of the Following Statements Is FALSE

question 40

Multiple Choice

Which of the following statements is FALSE?

• A)Estimating dividends,especially for the distant future,is difficult.
• B)A firm can only pay out its earnings to investors or reinvest their earnings.
• C)Successful young firms often have high initial earnings growth rates.
• D)According to the constant dividend growth model,the value of the firm depends on the current dividend level,divided by the equity cost of capital plus the growth rate.

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Definitions:

Break-even

The point at which total cost and total revenue are equal, meaning there is no net loss or gain.

Profit-maximizing

A strategy or condition where a firm adjusts its production to achieve the highest possible profit based on its costs and the market price.

Shut-down Point

The price and quantity point at which a business ceases operations because continuing would result in losses.

Economically Efficient

A situation where resources are allocated in a way that maximizes the net benefit to society or minimizes the cost of achieving a set output level.