In Problem 25, suppose the firm wishes to keep its debtequity ratio constant. What is EFN now?
Question:
In Problem 25, suppose the firm wishes to keep its debt–equity ratio constant. What is EFN now?
Data From Problem 25:
The most recent financial statements for Moose Tours, Inc., follow. Sales for 2009 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what external financing is needed to support the 20 percent growth rate in sales?
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To determine the external financing needed EFN to support the 20 percent growth rate in sales while keeping the debtequity ratio constant we need to c...View the full answer
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Related Book For 
Fundamentals of corporate finance
ISBN: 978-0073382395
9th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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