The Marginal Principle of Retained Earnings Means That Each Potential

question 92

Multiple Choice

The marginal principle of retained earnings means that each potential project to be financed by retained earnings must:

• A) provide a higher rate of return than the shareholders can achieve after paying taxes on the distributed dividends.
• B) yield a return equal to or greater than the marginal cost of capital.
• C) provide enough return to pay the corporation's marginal tax rate.
• D) have an internal rate of return greater than the corporate growth rate of dividends.

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Definitions:

Income Distribution

The way in which total income is shared among the members of a society.

Prejudiced Employer

An employer who harbors preconceived opinions or judgments about certain groups of people, which may unfairly influence hiring or workplace practices.

African Americans

A demographic group in the United States consisting of individuals with partial or total ancestry from any of the black racial groups of Africa.