Capital spending possible without selling new equity

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Reference no: EM132030364

The Real Data Corp. practices a strict residual dividend policy and maintains a target capital structure of 60 percent debt and 40 percent equity. Earnings for the new year are forecasted to be $5,000.

A. What is the maximum amount of capital spending possible without selling new equity?

B. Suppose the planned capital budget for the coming year includes investment outlays totaling $12,000. Will Real Data be able to pay a dividend? If so, how much?

Reference no: EM132030364

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