A fiRm Has an 8% Profit Margin and a

question 69

Multiple Choice

A firm has an 8% profit margin and a .9 ratio of sales to total assets. The firm maintains a 40% dividend payout ratio and a 10% rate of growth. If the debt-equity ratio is held constant, what must
That rate be?

• A) .70
• B) .89
• C) 1.10
• D) 1.52
• E) 1.70

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Definitions:

Recessionary Gap

A situation in economics where aggregate output is below potential output, leading to unemployment and underused resources.

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Fiscal Policy

A government's use of spending and taxation to influence the economy.

Money Supply

The total amount of monetary assets available in an economy at any specific time, including cash, coins, and balances held in checking and savings accounts.