Because Retained Earnings Are a Form of Internal Financing, the Dividend

question 3

True/False

Because retained earnings are a form of internal financing, the dividend decision can significantly affect a firm's external financing requirements.

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Definitions:

Marginal Cost

The charge for the production of one additional unit of a product or service.

Average Total Cost

The aggregate expense of manufacturing, including both fixed and variable costs, divided by the total number of units produced.

Marginal Cost

The price associated with manufacturing one more unit of a product or service.

Average Total Cost

The sum of all production expenses divided by the amount of goods produced.