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External equity financing
Northern Pacific Heating and Cooling Inc. has a 6-month backlog of orders for its patented solar heating system. To meet this demand, management plans to expand production capacity by 35% with a $20 million investment in plant and machinery. The firm wants to maintain a 35% debt-to-total-assets ratio in its capital structure. It also wants to maintain its past dividend policy of distributing 50% of last year's net income. In 2012, net income was $5 million. How much external equity must Northern Pacific seek at the beginning of 2013 to expand capacity as desired? Assume the firm uses only debt and common equity in its capital structure. Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest cent.
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he Los Angeles Lakers are sold for 650 Million. At a tax rate of 25% what is the new owner's yearly tax savings if he uses straight line depreciation of the purchase price over the full 15 years allowed by the IRS?
Analyze the current financial state of Anthony's Orchard and evaluate the impact of a major customer cancelling their expected order and explain how purchase of the apple press might affect the company's revenue goals. Based on this information, ex..
Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 60 percent and the probability of a recession is 40 percent. What is the expected return on the company's debt?
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $5.3 million in anticipation of using it as a warehouse and distribution site, but the comp..
Give the differences between current book value of the capital structure and a company’s target capital structure and their importance and explain why the current book value of the capital structure is likely to be different than a company's target c..
Explain in your own words what is meant by the terms Sweet Spot and Discretionary Area. Explain the significance of a security decision that is located to the right of the Sweet Spot but outside the Discretionary Area.
A stock has an expected return of 11 percent, its beta is 0.95, and the risk-free rate is 6 percent. What must the expected return on the market be?
Chris invested $150,000 17 months ago. Currently the investment is worth $180,000. Chris knows that the investment paid interest monthly, but he does not know what yield on his investment. What is Chris's annual percentage return (APR) and EAR?
Your Company is considering a new project that will require $570,000 of new equipment at the start of the project. The equipment will have a depreciable life of 7 years and will be depreciated to a book value of $241,000 using straight-line depreciat..
Sam wants to start a small commercial bakery to supply gourmet deserts to local restaurants. He believes that with his product line and his connections in the restaurant business, he can grow the business over the next five years into a profitable ni..
In what instances would an investor want to “beat the market” and “hold the market”? Discuss the strategies for each and their dependence on an investor’s information and trading skills.
Starting with your current situation, what must you do to ensure an annual retirement income of $75,000 starting at age 65? Make sure that you submit time value of money calculations that support the conclusions
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