The following facts appy to your companytarget capital, Ask an Expert

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The following facts appy to your company:

Target capital structure: 50% debt; 50% equity.

EBIT $200 million.

Assets $500 million.

Tax rate: 40%

Cost of new and old debt: 8%.

Based on the residual distribution policy (with all distributions in the form of dividends), the payout ratio is 60 percent. How large (in millions of dollars) will the capital budget be? Show solution step by step.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91827176

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