Assume a Firm with 5,000 Shares Outstanding Earns $10 Per

question 1

Multiple Choice

Assume a firm with 5,000 shares outstanding earns $10 per share and has a 30% plowback ratio. These earnings will cause retained earnings to:

• A) increase by $15,000.
• B) increase by $50,000.
• C) decrease by $15,000.
• D)decrease by $50,000.

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Definitions:

$500,000 Loan

A sum of money borrowed that amounts to five hundred thousand dollars, which is subject to repayment conditions set by the lender.

Breach Of Partner's Duty

The failure of a business partner to fulfill their obligations or act in the best interest of the partnership, violating their fiduciary duties.

Auditing Services

Professional services provided by a certified auditor to examine and evaluate the accuracy of financial statements and records of an organization.

Partnership Agreement

A contract among partners in a partnership which outlines the terms and conditions of the relationship, duties, and profit distribution.