Financial Information for Retro Designs Includes the Following Selected Data

question 33

Multiple Choice

Financial information for Retro Designs includes the following selected data: What is the company's earnings per share?
$$\begin{array} { | l r | } \hline \text { Net income (in millions) } & \$ 175 \\\hline \text { Preferred stock dividends (in millions) } & \$ 25 \\\hline \text { Common shares outstanding (in millions) } & 250 \\\hline \text { Stock price } & \$ 10.00 \\\hline\end{array}$$

• A)$0.60.
• B)$0.70.
• C)$0.50.

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Definitions:

Law of Diminishing Returns

The principle that as investment in a single factor of production increases, holding all others constant, the incremental gains in output will eventually decrease.

Law of Diminishing Marginal Utility

states that as a person consumes more of a good or service, the utility (satisfaction) gained from each additional unit decreases.

Principal-agent Problem

A dilemma occurring when one person or entity (the agent), is able to make decisions on behalf of, or that impact, another person or entity: the principal.

Complementary Resource

A good or service that enhances the use or value of another good or service when the two are used together.