Which of the Following Statements Is Correct for a Firm

question 76

Multiple Choice

Which of the following statements is correct for a firm with 100,000 outstanding shares and earnings per share of $6 if retained earnings were just adjusted downward by $50,000?

• A)A $5.50 dividend per share was paid
• B)A $6.50 dividend per share was paid
• C)Net earnings equal $650,000
• D)Total dividends paid equal $50,000 retained earnings = net income less dividends
• ($50,000) = ($6 x 100,000) less dividends
• $450,000 = dividends

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Definitions:

Diminishing Returns

The principle that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after reaching an optimal level.

Opportunity Cost

The act of foregoing potential opportunities for gain from several alternatives when deciding on one.

T-shirts

Casual garments made from fabric, typically short-sleeved and collarless, worn as informal wear or under clothing.

Rice

A cereal grain which is a staple food for a large part of the world's human population, especially in Asia.