(Answered) 1 your firm expects to incur a 500k loss in year 1 and make

Finance

1. Your firm expects to incur a ($500K) loss in year 1 and make $100K of net income in year 2 and $300K of net income in year 3. The retention ratio is projected to be 100%. The beginning equity balance on the balance sheet at the beginning of year 1 is $600K. Assuming you sell an additional $500K of stock in year 2, the equity balance at the end of year 3 would be expected to be __________.

a. $100K

b. $1,000K

c. $700K

d. $500K

e. $167k

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