Northern pacific heating and cooling inc has a 6-month

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Northern Pacific Heating and Cooling Inc. has a 6-month backlog of orders for its patented solar heating system. To meet this demand, management plans to expand production capacity by 40 percent with a $10 million investment in plant and machinery. The firm wants to maintain a 40 percent debt-to-total-assets ratio in its capital structure; it also wants to maintain its past dividend policy of distributing 45 percent of last year"s net income. In 2002, net income was $5 million. How much external equity must Northern Pacific seek at the beginning of 2003 to expand capacity as desired?

Reference no: EM13572847

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