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Tessa s Pharmacy has decided to invest $ 5 , 0 0 0 , 0 0 0 in capital projects that will become available next

Tessas Pharmacy has decided to invest $5,000,000 in capital projects that will become available next year. The firm has an optimal (target) D/E ratio of 1 and has forecasted a net income of $3,000,000 for next year. If the firm will pay out next years residual net income as a cash dividend, calculate the amount of earnings retained for financing next years capital projects, the amount of external debt needed, and the dividend amount.

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