the relationship between investment and the growth of capital is?

Question

a. very strong
b. very weak
c. always the same
d. none of the above

Answer 1

growth g= rb+(r-ki)(1-tc)bxB/S where r is roi, b is retention rate, ki cost of debt, tc is corporate tax rate, B/S is the capital sturcture. This shows that when r grows the growth also will grow.