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Question : John the CFO of Interbug Biotech has been analyzing the company's capital structure. It is 45% equity using retained earnings. Currently the company
Question : John the CFO of Interbug Biotech has been analyzing the company's capital structure. It is 45% equity using retained earnings. Currently the company uses retained earning for common equity with a cost of 10%. The amount of retained earnings is $4 million when this is exceeded the company will need to issue new common equity. At what level of capital will the retained earning be used up and require the company to issue new equity?
I need the solution and answer of the question. Thank you
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