Question: Lavaca Inc. management expects net sales to be $855,000, total costs to be $647,000, and to pay taxes at an average rate of 32 percent

Lavaca Inc. management expects net sales to be $855,000, total costs to be $647,000, and to pay taxes at an average rate of 32 percent this year. If the Lavaca pays out 38 percent of its earnings as dividends, what is its retention ratio? How much will Lavaca's retained earnings increase?

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