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A firm is currently capitalized with $300,000 long-term debt and $100,000 equity. The firms earnings at this year-end are $40,000. The firm follows a residual

A firm is currently capitalized with $300,000 long-term debt and $100,000 equity. The firms earnings at this year-end are $40,000. The firm follows a residual dividend policy.

What is the maximum capital budget the firm can have without raising external equity?

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