CHAPTER 6: PROBLEMS

Div. payout ratio = 0.503896 or 50.39%. 9-14 If the investment requires $5.9 million, that means that it requires $3.54 million (60%) of equity capital and $2.36 million (40%) of debt capital. In this scenario, the firm would exhaust its $2 million of retained earnings and be forced to raise new stock at a cost of 15%. ................
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