How much external equity must northern pacific seek

Assignment Help Financial Econometrics
Reference no: EM13336235

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 15% with a $15 million investment in plant and machinery. The firm wants to maintain a 30% debt-to-total-assets ratio in its capital structure. It also wants to maintain its past dividend policy of distributing 45% 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.

Reference no: EM13336235

Questions Cloud

Determine what will be the payout ratio of project : Welch Company is considering three independent projects, each of which requires a $4 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects
Develop a domain model for the case study : The objective of the assignment is to apply and consolidate skills acquired in the requirement and analysis disciplines through analysis of a simple case study, and to express the results through the relevant UML diagrams.
Explain an ideal solution of cyclohexane and toluene : The mole fraction of toluene in an ideal solution of cyclohexane and toluene that has a vapor pressure equals to 53.2 mmHg at 25oC is: A) 0.25 B) 0.28 C) 0.31 D) 0.35
Hold the baseball and sheet of paper side by side : 1.) Hold the baseball and sheet of paper side by side. Predict which one will travel with the faster motion when released. Then drop them both at the same time. Did your prediction match the results?
How much external equity must northern pacific seek : 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 15%
State van''t hoff factor of the lithium fluoride solution : An aqueous solution is prepared from 40.0 g of lithium fluoride "LiF" (a nonvolatile ionizable electrolyte) in 200.0 g of water. Given Kb water = 0.52oC/m and the van't Hoff factor of this lithium fluoride solution = 1.20, the boiling point elevat..
How far does the point where the two wires meet move : Two steel wires of the same length, one with radius r and the other with radius 2r, are connected together, end to end, and tied to a wall. How far does the point where the two wires meet move
Advise the liquidator : Advise the liquidator whether any of the directors of GG Ltd are in breach of any director's duties owed to the company? If so, what consequences might result? Explain.
What is the boiling point temperature of water : A) What is the Boiling Point (Temperature) of Water?

Reviews

Write a Review

Financial Econometrics Questions & Answers

  What is the value of a right-rights-on or right-off

A stock is currently quoted at 53 on NASDAQ. A Rights Offering has been declared with an exercise price of 48, and 4.92 rights are needed to buy a new share of stock.

  What is operating cash flow of project based on tax shield

A project will reduce costs by $34,000 but increase depreciation by $16,500. What is the operating cash flow of this project based on the tax shield approach if the tax rate is 40 percent

  What is the goal of common-size analysis

What does the financial analysis process reveal and what is the goal of common-size analysis

  What percentage of risky portfolio will maximize utility

A fund has expected risk premium of 8% and an expected SD of 20%. T-Bill is 3%. Utility function is U=E(r)-2.5SD^2. What percentage of risky portfolio will maximize utility

  Determine epsdebt and epsstock at that sales level

Wingler Communications Corporation (WCC) produces premium stereo headphones that sell for $28.60 per set, and this year's sales are expected to be 440,000 units.

  Find what is annes annual after-tax rate of return

Anne's marginal income tax rate is 20 percent. She purchases a corporate bond for $20,000 and the maturity, or face value, of the bond is $20,000.

  How to prepare a multiple-step income statement for 2013

sales revenue, $2,105; cost of goods sold, $1,250; selling expenses, $120; general and administrative expenses, $110; interest expense, $35; and gain on sale of investments, $50. Income tax expense has not yet been accrued.

  What is the estimated cost of common equity using the capm

Booher Book Stores has a beta of 1.3. The yield on a 3-month T-bill is 5% and the yield on a 10-year T-bond is 6.5%. The market risk premium is 6%. What is the estimated cost of common equity using the CAPM

  What is current value per share of video toys common stock

Video Toys manufacturers and sells arcade games. Dividends are currently $1.50 per share and are expected to grow at a 15% compound annual rate over the next three years.

  What is the total asset turnover and the capital intensity

Silas 4-Wheeler, Inc., has an ROE of 18.05 percent, equity multiplier of 1.60, and a profit margin of 18.80 percent. What is the total asset turnover and the capital intensity

  Find scientific softwares effective annual rate of interest

Accounts receivable as collateral, cost of borrowing Maximum Bank has analyzed the accounts receivable of Scientific Software, Inc. The bank has chosen eight accounts totaling $134,000 that it will accept as collateral.

  What was the amount of dividends paid by mardle in 2012

At the end of 2011 Mardle Inc. reported retained earnings of $1,256 . At the end of 2012, the retained earnings were $4,642 . If Mardle Inc. had net income of $4,120 in 2012, what was the amount of dividends paid by Mardle in 2012

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd