Target capital structure that consists of debt and equity

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A company has a target capital structure that consists of 40 percent debt and 60 percent equity. The company's capital budget for next year is $10 million. The company expects a net income of $8 million. The company's cost of capital is 12 percent. If the company decided to pay out $4.5 million in dividends, how much would it need to raise in equity outside the company?

Reference no: EM13765652

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