22. Suppose that a company is committed to its expansion plans and to its dividend policy, It also wishes to maintain its debt-equity ratio at 0.67. What are the implications of-external financing?

a.

The total amount of external financing is unchanged, since the dividend payout is unchanged.

b.

The total amount will be changed by $40,000 since the debt-to-equity ratio is 0.67.

c.

The firm will need to issue an additional new equity to support the finance

d.

This will have a negative impact on retained earning which will increase the shareholders equity.