A Tax Levied on fiRms That Emit Pollution Is an Example

question 86

True/False

A tax levied on firms that emit pollution is an example of government intervention in the market in public interest.

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Definitions:

Internal Growth Rate

The highest amount of growth achievable for a business without obtaining external financing, based solely on reinvestment of its earnings.

Plowback Ratio

Also known as the retention rate, it measures the proportion of earnings that a company retains and reinvests in its operations rather than paying out as dividends.

Debt-equity Ratio

The ratio that exhibits the financing divide between debt and equity for company assets.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without increasing financial leverage, often calculated using ROE and the dividend payout ratio.