Fake News Entertainment Corporation earned $500,000 in operating profits (revenue less operating costs) last year. It paid $50,000 in interest and spent $60,000 on new equipment for expansion. Its tax rate is 20% and it maintains a dividend payout ratio of 45%. This year it expects to achieve exactly the same results, hence it plans to expand further and double its spending on new equipment. What will happen to Retained Earnings this year compared to last?
a) higher
b) same
c) lower
Ans: b) same
Business
You might also like to view...
The total variable cost flexible-budget variance includes all the following except:
a. Direct materials variances. b. The Sales price variance. c. Variable selling and administrative expenses variances. d. Direct labor variances. e. Variable overhead variances.
Business
A company that sells only multigrain, low-calorie bread should use a(n) ________ targeting strategy.
A. micromarketing
B. concentrated
C. differentiated
D. undifferentiated
E. mass
Business