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What would be the maximum amount of new project

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Question - Farmgirl company has issued 1,200,000 shares of common stock outstanding and you can buy one share at $10 on the market. The management group is conservative so they believe a D/E ratio of 0.2 is appropriate. The earnings are estimated to be $750,000 for next year. If the company wants to finance a new project, what would be the maximum amount of new project that the firm can finance without issuing any additional stocks?

Reference no: EM133075967

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