Suppose a Firm Has a Retention Ratio of 85 Percent

question 93

Multiple Choice

Suppose a firm has a retention ratio of 85 percent and net income of $225 million. How much does it pay out in dividends?

• A) $33,750,000
• B) $175,000,000
• C) $191,250,000
• D) $225,000,000

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Definitions:

Music Industry

The sector of the economy that is responsible for the production, distribution, and promotion of music and its related products and services.

Newspaper Industry

The sector of the economy involved in the production and distribution of daily or weekly publications containing news, information, and advertising.

Primary Activities

Those business activities related to the production and distribution of the firm’s products and services, thus creating value.

Support Activities

Business activities that do not add value directly to a firm’s product or service under consideration but support the primary activities that do add value.