Donovan's Would Like to Increase Its Internal Rate of Growth

question 86

Multiple Choice

Donovan's would like to increase its internal rate of growth.Decreasing which one of the following will help the firm achieve its goal?

• A)Return on assets
• B)Net income
• C)Retention ratio
• D)Dividend payout ratio
• E)Return on equity

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Definitions:

Inferior Good

A type of good for which demand decreases as the income of individuals or the economy increases, opposite to what is observed with a normal good.

Law of Supply

It states that, all else equal, an increase in the price of a good or service will lead to an increase in the quantity supplied.

Law of Demand

An economic principle stating that the quantity demanded of a good decreases as its price increases, all else being equal, and vice versa.

Diminishing Marginal Utility

Diminishing marginal utility is the principle stating that as a person consumes more of a good, the satisfaction gained from consuming each additional unit decreases.