Question: Need for External Financing To increase production capacity by 20%, an $8 million investment is needed. The firm wants to maintain a 25% debt-to-asset ratio

Need for External Financing To increase production capacity by 20%, an $8 million investment is needed. The firm wants to maintain a 25% debt-to-asset ratio and continue to pay 40% of income as dividends. Net Income was $5 million.

A. How much External Financing is needed?

B. How much new Debt must they Issue?

C. How much new external equity should they issue?

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