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:

Property Rights

Legal rights over the use, control, and benefits of ownership for property, including real, personal, and intellectual property.

Exclusive Use

The condition or situation where access or rights to a resource or property are limited to a specific person or entity.

Legal Protection

Measures and laws in place to safeguard individuals, groups, or organizations against infringement or harm regarding their rights, property, or well-being.

Private Ownership Rights

Legal protections that allow individuals or businesses to own, use, and transfer property freely.