Need for External Financing To increase production capacity by 20%, an $8 million investment is needed. The firm wants to maintain a 25% debt-to-asset ratio, and continue to pay 40% of income as dividends. Net Income was $5 million. How much External Financing is needed? How much new Debt must they Issue? How much new external equity should they issue?

Need for External Financing To increase production capacity by 20%, an $8 million investment is needed. The firm wants to maintain a 25% debt-to-asset ratio, and continue to pay 40% of income as dividends. Net Income was $5 million. How much External Financing is needed? How much new Debt must they Issue? How much new external equity should they issue?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 11P

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