Northern Pacific Heating and Cooling Inc. has a 6-month backlog of orders for its patented solar heating
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Northern Pacific Heating and Cooling Inc. has a 6-month backlog of orders for its patented solar heating system. To meet this demand, management plans to expand production capacity by 40 percent with a $10 million investment in plant and machinery. The firm wants to maintain a 40 percent debt-to-total-assets ratio in its capital structure; it also wants to maintain its past dividend policy of distributing 45 percent of last year’s net income. In 2002, net income was
$5 million. How much external equity must Northern Pacific seek at the beginning of 2003 to expand capacity as desired?
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Corporate Finance A Focused Approach
ISBN: 9780324180350
1st Edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
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