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8. (8 points) Need for External Financing To increase production capacity by 20%, a $3 million investment is needed. The firm wants to maintain

8. (8 points) Need for External Financing To increase production capacity by 20%, a $3 million investment is needed. The firm wants to maintain a 40% debt-to-asset ratio, and continue to pay 75% of income as dividends. Net Income was $4 million. A. How much External Financing is needed? B. How much new Debt must they Issue? C. How much new external equity should they issue?

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