89$eBookCoastal Carolina 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 50% with a $5 million investment in plant andmachinery. The firm wants to maintain a 35% debt level in its capital structure. It also wants to maintain its past dividend policy of distributing 60% of last year's net income. In 2021, net income was $5 million. How much external equitymust Coastal Carolina seek at the beginning of 2022 to expand capacity as desired? Assume that the firm uses only debt and common equity in its capital structure. Write out your answer completely. For example, 25 million should beentered as 25,000,000. Round your answer to the nearest cent.

Formula to calculate the required external equity is:Total required equity - Retained…

Answered: Coastal Carolina Heating and Cooling…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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