GM decides to build a new plant using retained earnings; all of the following are true except

Question

Quizplus · Accepted Answer

Retaining earnings and using them to build a new plant means that GM is not distributing those earnings to its shareholders as dividends. Therefore, shareholders will miss out on potential returns they could earn if they used that money in other investments. This means that GM is experiencing opportunity costs by not using those retained earnings in other ways, making choice D untrue. Choices A, B, and C are all true statements.

GM Decides to Build a New Plant Using Retained Earnings;