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

question 17

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%.
• E)none of the above.

---

Definitions:

Mutually Exclusive

Refers to events or properties that cannot occur or be true at the same time.

Distribution

The process of making a product or service available for the consumer or business user who needs it, which can involve transportation, packaging, and delivery.

Ratio

A mathematical relationship that compares two numbers or quantities, indicating how many times one value contains or is contained by the other.

Frequencies

The number of times an event occurs within a specified period, often used in the context of waves or signals.