Which of the Following Is Correct for a Firm with $400,000

question 45

Multiple Choice

Which of the following is correct for a firm with $400,000 in net earnings,20,000 shares,and a 30% payout ratio?

• A) Retained earnings will increase by $120,000.
• B) Each share will receive a $1.20 dividend.
• C) $120,000 will be spent on new investment.
• D) The dividend per share will equal $6.00.

---

Definitions:

Illegal Restraint

Actions or practices that unlawfully restrict an individual's freedom of movement or personal liberty.

Act Of God

An event caused by natural forces beyond human control, such as floods or earthquakes, that is not attributable to human actions.

Fundamental Breach

A serious violation of a contract that permits the aggrieved party to terminate the agreement and seek damages.

Exculpatory Clause

A contract provision that relieves one party of liability if damages are caused during the execution of the contract.