In 1974, One Could Buy a Theater for $1

question 338

Multiple Choice

In 1974, one could buy a theater for $1.25. Today the same theater ticket costs $6.50. Which pair of CPIs would imply that the cost in today's dollars was the same for both tickets?

• A) 60 in 1964 and 390 today
• B) 75 in 1964 and 390 today
• C) 80 in 1964 and 404 today
• D) 95 in 1964 and 475 today

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Definitions:

Plowback Ratio

Also known as the retention rate, it measures the proportion of earnings that a company retains and reinvests in its operations rather than paying out as dividends.

Debt-equity Ratio

The ratio that exhibits the financing divide between debt and equity for company assets.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without increasing financial leverage, often calculated using ROE and the dividend payout ratio.

Shareholders' Equity

Shareholders' Equity is the residual interest in the assets of a corporation after deducting its liabilities, essentially representing ownership equity.