If a Firm Uses External Financing as a Plug Item,has

question 17

Multiple Choice

If a firm uses external financing as a plug item,has a new capital budget of $2 million,a net income of $3 million,and a plowback ratio of 40%,how much should be raised in external funds?

• A) $200,000
• B) $600,000
• C) $800,000
• D) $1,200,000

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Definitions:

Organizational Strategy

A plan outlining how a company will allocate its resources to achieve its long-term goals, aligning various aspects such as marketing, operations, and finance.

Talented Tenth

A term coined by W.E.B. Du Bois referring to the leadership class of African Americans in the early 20th century, emphasizing the importance of higher education and social responsibility.

Racial Equality

The principle that individuals should have equal rights and opportunities regardless of their race.

Booker T. Washington

An influential African American educator, author, and advisor to several U.S. Presidents in the late 19th and early 20th centuries.