For a Dividend Paying Firm,how Is the Projected Addition to Retained

question 44

Multiple Choice

For a dividend paying firm,how is the projected addition to retained earnings calculated using the percentage of sales approach?

• A)Net income × (1 - Retention ratio)
• B)Net income × (1 - Dividend payout ratio)
• C)(Cash dividends / Net income)× (New sales / Old sales)
• D)(Retained earnings / Sales)× (New Sales / Old Sales)
• E)Net income × (New Sales / Old Sales)

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Definitions:

Marginal Cost

The cost of producing one additional unit of a good or service, taking into account factors that vary with production levels.

Average Cost

The total cost of production divided by the number of units produced, indicating the cost per unit of output.

Rent-Seeking Behavior

Activities aimed at increasing one's share of existing wealth without creating new wealth, often through manipulating the social or political environment.

Net Social Gain

The total benefit to society from producing and consuming a good or service, taking into account both the private benefits and costs and any external benefits or costs.