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Northern Pacific Inc. will be expanding its produc...

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Northern Pacific Inc. will be expanding its production capacity with a $10 million investment in new equipment to meet growing demand. The firm will maintain a 40 percent debt-to-asset ratio in its capital structure. It will also maintain its past dividend policy of distributing 45 percent of last year?s net income which was $5 million in 2005. How much external equity must Northern Pacific seek at the beginning of 2006 to expand capacity as desired? Answer a. $2.75 million b. $3.25 million c. $8.75 million d. $6.00 million e. $7.25 million

 

Paper#10188 | Written in 18-Jul-2015

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