Delta Company has 100,000 shares outstanding and plans to pay $1.00 per share in dividends each quarter next year. Delta has a capital budget of $700,000 for next year and plans to maintain its present debt ratio of 0.30. If earnings are expected to be $7.20 per share, how much external equity must Delta raise?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter15: Dividend Policy
Section: Chapter Questions
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How much external equity must delta raise?

Delta Company has 100,000 shares
outstanding and plans to pay $1.00 per
share in dividends each quarter next year.
Delta has a capital budget of $700,000 for
next year and plans to maintain its present
debt ratio of 0.30. If earnings are expected
to be $7.20 per share, how much external
equity must Delta raise?
Transcribed Image Text:Delta Company has 100,000 shares outstanding and plans to pay $1.00 per share in dividends each quarter next year. Delta has a capital budget of $700,000 for next year and plans to maintain its present debt ratio of 0.30. If earnings are expected to be $7.20 per share, how much external equity must Delta raise?
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