Suppose a Firm Has a Retention Ratio of 25 Percent

question 80

Multiple Choice

Suppose a firm has a retention ratio of 25 percent, net income of $21 million, and 3 million shares outstanding. What would be the dividend per share paid out on the firm's stock?

• A) $0.14
• B) $1.75
• C) $5.25
• D) $7.00

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Definitions:

Law Of Demand

The economic principle that, all else equal, an increase in the price of a good will decrease the quantity demanded, and conversely, a decrease in price will increase the quantity demanded.

Quantity

The amount or number of a material or immaterial entity that is measureable.

Equilibrium Price

The selling price where the amount of products offered is equal to the amount of products consumers want to buy.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a particular price over a specified period.