A company is considering an expansion in its manufacturing capacity with an $18,000,000 investment in new machinery. The company plans to maintain its current 60% debt-to-total-assets ratio for its capital structure and to maintain its dividend policy in which at the end of each year it distributes 40% of the year's net income. The company's external equity needed is $6,000,000.

What is the company's Addition to Retained Earnings? *

6 points

$1,200,000

$7,200,000

$2,000,000

No addition to retained earnings

10) What is the current company's Net Income? *

6 points

$1,200,000

$7,200,000

$2,000,000

None of the above