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Problem:

A company has a target capital structure that consists of 40 percent debt and 60 percent equity. The company's capital budget for next year is $10 million. The company expects a net income of $8 million. The company's cost of capital is 12 percent.

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Question: If the company decided to pay out $4.5 million in dividends, how much would it need to rise in equity outside the company?

Note: Give you opinion citing relevant ethical principles.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91174804

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