The total market value for Disney was $490M at the start of this year. During the year Disney plans to raise and invest $200M in new projects. The companys present market value capital structure, shown below is considered to be optimal. Assume that there is no short-term debt. Debt $155M; Common equity $335M; Total Capital $490M. New bonds will have an 8 percent coupon rate, and they will be sold at par. Common stock is currently selling at $55 a share and has of a dividend yield of 6 percent and an expected constant growth rate of 4 percent. The marginal corporate tax rate is 30 percent.

Assume that there is sufficient cash flow such that Disney can maintain its target capital structure without issuing additional shares of equity.

a.) To maintain the present capital structure, how much of the new investment must be financed by common equity?