Question
For the next fiscalyear, you forecast net income of $50, 000 and ending assets of 500,000. Yourfirm's payout ratio is 10.4%. Your beginningstockholders' equity is
For the next fiscalyear, you forecast net income of $50, 000 and ending assets of 500,000. Yourfirm's payout ratio is 10.4%. Your beginningstockholders' equity is 300,000, and your beginning total liabilities are 125,000. Yournon-debt liabilities such as accounts payable are forecasted to increase by 11,000. Assume your beginning debt is 115,000. What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep yourdebt-equity ratioconstant?
I start off doing okay for this question but I get stuck on the part where I have to find The New Equity and New Debt it shows the answer as New Debt/479000-New Debt = 0.38333 Then it says Thus, the amount of debt needed to maintain the ratio is $132,735 I have no idea how they got the number 479000 and especially the number 132735?
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