A firms currently capitalized with $200,000 long-term debt and $300,000 equity. The firm's earnings at this year-end are $24,000. The firm follows a residual dividend policy. What is the maximum capital budget the firm can have without raising external equity?

Answer rating: 100% (QA)

SOLUTION To determine the maximum capital budget the firm can have without raising external equity we need to first calculate the amount of earnings t... View the full answer