Under the Walter Model if the rate of return is greater...

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Under the Walter Model, if the rate of return is greater than the cost of capital, then what should be the impact of it?

A. These firms are called growth firms, they should have a hundred per cent payout ratio

B. These firms are called growth firms, they should have a zero payout ratio

C. The firm is indifferent towards how much is to be retained and how much is to be distributed among the shareholders

D. There is no method to show relationship between returns and cost under Walter's Model

Answer: Option B

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