Suppose a Firm Has a Retention Ratio of 85 Percent

question 93

Multiple Choice

Suppose a firm has a retention ratio of 85 percent and net income of $225 million. How much does it pay out in dividends?

• A) $33,750,000
• B) $175,000,000
• C) $191,250,000
• D) $225,000,000

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Definitions:

Real Income

An individual's income adjusted for inflation, reflecting the actual purchasing power of the income.

Producing Automobiles

The process of manufacturing cars, which involves assembling various components like engines, frames, and electronics.

Productivity

A measure of the efficiency of production, often calculated by dividing total output by the total inputs used in the production process.

Demand

The amount of a good or service that buyers are ready and capable of buying at different price levels over a given time frame.