Computing external equity for northern pacific at beginning


1) Northern Pacific Heating and Cooling Inc. have a six-month backlog of orders for its patented solar heating system. To fulfil this demand, management plans to develop production capacity by= 25% with $20 million investment in plant and machinery. Firm wishes to sustain 55% debt-to-total-assets ratio in its capital structure. It also wishes to sustain its past dividend policy of distributing= 45% of last year's net income. During 2012, net income was $5 million. How much external equity should Northern Pacific seek at the beginning of 2013 to expand capacity as desired? Suppose firm uses only debt and common equity in its capital structure. Write out your answer fully. For instance, 25 million must be entered as 25,000,000.

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Finance Basics: Computing external equity for northern pacific at beginning
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