Marcos Inc

question 46

Multiple Choice

Marcos Inc.had net income for 2014 of $40,000.It declared and paid a $3,500 cash dividend in 2014.If the company's retained earnings for the end of the year was $38,200, what was the company's retained earnings balance at the beginning of 2014?

• A)$81,700
• B)$74,700
• C)$5,300
• D)$1,700

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Definitions:

Growing Perpetuity

A type of investment that provides an infinite series of cash flows that grow at a consistent rate indefinitely.

Generalization

The process of forming general concepts from specific instances by abstracting common properties.

Expected Growth Rate

The anticipated rate at which an investment, company, or economy will grow in a specific period.

Required Return

The minimum expected return by investors for investing in a particular security or project, considering the risk involved.