If a Firm Pays Out 30% of Its Earnings as Dividends

question 143

Multiple Choice

If a firm pays out 30% of its earnings as dividends and has averaged a 20 percent return on assets, how quickly can the firm grow without needing to secure outside funding sources?

• A) 6.4%.
• B) 10.2%.
• C) 16.3%.
• D) 20.0%.

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Definitions:

Democratic Government

A form of government in which power is vested in the people and exercised by them directly or through freely elected representatives.

Collectivization

The process of transforming private assets, properties, or industries into collectively owned entities, often associated with communist or socialist policies.

Relative Deprivation Theory

A theory suggesting that individuals who perceive themselves as having less resources or social advantages than others in their group or society are more likely to engage in social movements or deviant behaviors.

Social Rewards

Benefits or recognitions received from others in a social context, often as a result of one's behavior or achievements.