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Pierre Imports has a capital budget of $20 million...

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Pierre Imports has a capital budget of $20 million. It wants to maintain a capital structure of 45 percent debt and 55 percent equity. This year it expects net income of $8 million. The company has 30 million authorized shares, and 10 million are outstanding. Last year the company paid a dividend of $0.20 per share. How much external equity does the company need to raise if it follows a residual dividend policy?

 

Paper#7302 | Written in 18-Jul-2015

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