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Which one of these formulas correctly defines the retention ratio ( RR ) for a levered firm with both preferred and common. stock? R R

Which one of these formulas correctly defines the retention ratio

(

)

for a levered firm with both preferred and common. stock?

R R = 1 -

Dividend payout ratio

R R =

Addition to retained earnings

/

Sales

R R = 1 +

Dividend payout ratio

=

Addition to retained earnings

/

Net income

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