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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