Exam Question
Under the marginal principle of retained earnings
- 1. the firm must compare what it can earn with what shareholders could earn on funds if they were distributed
- 2. all funds above and beyond retained earnings are paid to shareholders
- 3. funds not paid to creditors and preferred shareholders belong to common shareholders
- 4. all projects are financed internally
View Answer
Answer 1. the firm must compare what it can earn with what shareholders could earn on funds if they were distributed
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