A firm maintains a constant dividend payout ratio of .40.What must the plowback ratio be?
A)1 + .40
B)1 - .40
C)1 × .40
D)1/.40
E).40

Name: A firm maintains a constant dividend payout ratio of .40.What must the plowback ratio be? A)1 + .40 B)1 - .40 C)1 × .40 D)1/.40 E).40
Brand: Quizplus
Rating: 4.8 (43 reviews)

Question

Quizplus · Accepted Answer

The dividend payout ratio and plowback ratio must add up to 1. Therefore, if the dividend payout ratio is 0.40, the plowback ratio must be 1 - 0.40 = 0.60.

A Firm Maintains a Constant Dividend Payout Ratio of