The Marginal Principle of Retained Earnings Means That Each Potential

question 84

Multiple Choice

The marginal principle of retained earnings means that each potential project to be financed by retained earnings must

• A) provide a higher rate of return than the stockholders can on their after-tax dividend income.
• B) yield a return equal to or greater than the marginal cost of capital.
• C) provide enough return to pay the corporation's marginal tax rate.
• D) provide enough return to pay future dividends.

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