The Home Store Reported the Following Figures: Retained Earnings,February 1,2013

question 83

Multiple Choice

The Home Store reported the following figures: Retained Earnings,February 1,2013...........$20,000,000
Retained Earnings,February 1,2012...........$17,000,000
The company's fiscal year ends on February 1 each year.Net income for the fiscal year ending February 1,2013 is $5 million.What are the dividends declared for the fiscal year ending February 1,2013?

• A)$0
• B)$2 million
• C)$3 million
• D)$5 million

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Definitions:

Risk Averse

The tendency to prefer certainty over risk, where an individual opts for the investment with the least potential for financial loss.

NPV

A financial metric that calculates the total value of a project or investment by discounting future cash flows back to their present value and subtracting initial investment cost.

Scenario Analysis

A business planning technique in which the implications of variations in planning assumptions are explored. Also known as “what-if-ing.”

Abandonment Option

A financial decision allowing companies to cease a project or investment to avoid further losses.