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What amount of debt would you need to issue

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Question 1 - For the next fiscal year, you forecast net income of $50,000 and ending assets of $500,000. Your firm's payout ratio is 10%. Your beginning stockholders' equity is $300,000 and your beginning total liabilities are $120,000. Your non-debt liabilities, such as accounts payable, are forecasted to increase by $10,000. What is your net new financing needed for next year?

Question 2 - Assume your beginning total liabilities in Question 1 is $100,000. What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep your debt-equity ratio constant?

Reference no: EM133146914

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