Northern California Heating and Cooling, Inc. has a six-month backlog of orders for its patented solar heating system. To meet this demand, management plans to expand the firm’s production capacity by 40 percent with a $10 million investment in plant and machinery. The firm wants to maintain a 40 percent debt/assets ratio in its capital structure; it also wants to maintain its past dividend policy of distributing 45 percent of last year’s net income. Last year’s net income was $5 million. How much external equity must Northern California seek at the beginning of this year to expand its capacity as desired?
Answer to relevant QuestionsThe Garlington Corporation expects next year’s net income to be $15 million. The firm’s debt/assets ratio currently is 40 percent. Garlington has $12 million of profitable investment opportunities, and it wishes to ...Describe the three classifications of inventory, and indicate the purpose of holding each type.Small Fry Pools generally carries an amount of receivables equal to $80,000, and its annual credit sales equal $2.4 million. What are Small Fry’s (a) Receivables turnover (b) Receivables collection period (DSO)?Susan Visscher, owner of Visscher’s Hardware, is negotiating with First Merchant’s Bank for a $50,000, one-year loan. First Merchant’s has offered Visscher the following alternatives. Calculate the EAR for each ...Durst Corporation began operations five years ago as a small firm serving customers in the Denver area. However, its reputation and market area grew quickly so that today Durst has customers throughout the entire United ...
Post your question