External Equity Financing Gardial GreenLights, a manufacturer of energy-efficient lighting solutions, has had such success with...

External Equity Financing

Gardial GreenLights, a manufacturer of energy-efficient lighting solutions, has had such success with its new products that it is planning to substantially expand its manufacturing capacity with a $20 million investment in new machinery. Gardial plans to maintain its current 35% debt-to-total-assets ratio for its capital structure and to maintain its dividend policy in which at the end of each year it distributes 60% of the year's net income. This year's net income was $8 million. How much external equity must Gardial seek now to expand as planned? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.

$ million

Solutions

Expert Solution

jeff jeffy answered 2 weeks ago

Next > < Previous

Related Solutions

You are considering a project which requires $136,000 in external financing. The flotation cost of equity...

You are considering a project which requires $136,000 in external financing. The flotation cost of equity is 11 % and the cost of debt is 4.5 %. You wish to maintain a debt-equity ratio of.45. What is the initial cost of the project including the flotation costs? Multiple Choice $149,422 $143,367 $155,283 $138,009 $154,004

Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible.

The most recent financial statements for Live Co. are shown here: Income Statement Balance Sheet Sales $10,000 Current assets $21,563 Debt $21,252 Costs 6,000 Fixed assets 15,089 Equity 15,400 Taxable income $4,000 Total $36,652 Total $36,652 Taxes (33%) 1,320 Net income $2,680 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio. No external equity financing is possible. Required: What is the sustainable growth rate? (Do not round...

A firm has adopted a policy where it uses no external financing. What is the maximum...

A firm has adopted a policy where it uses no external financing. What is the maximum possible growth rate of the firm if net income is 9,600, total equity is 66,000, total assets are 150,000 and 30% dividend payout ratio a. 10.19 b 6.84 c 11.33 d 4.69 e.14.55

Q1.(10 pts) The fridge manufacturer claims the average daily electricity consumption of one energy efficient model...

Q1.(10 pts) The fridge manufacturer claims the average daily electricity consumption of one energy efficient model is 0.5 kW.h, the standard deviation of the daily electricity consumption is 0.16 kW.h. For one random sample of 45 fridges, Find the probability that the sample average daily electricity consumption is greater than 0.55 kW.h. Q2.(10 pts) Following the above Q1, 1.(5 pts) Given a random sample 45 fridges of this model, the average daily electricity consumption of this sample is 0.52 kW.h,...

Q1.The fridge manufacturer claims the average daily electricity consumption of one energy-efficient model is 0.5 kW.h,...

Q1.The fridge manufacturer claims the average daily electricity consumption of one energy-efficient model is 0.5 kW.h, the standard deviation of the daily electricity consumption is 0.16 kW.h. For one random sample of 45 fridges, Find the probability that the sample average daily electricity consumption is greater than 0.55 kW.h. Q2.Following the above Q1, a. Given a random sample 45 fridges of this model, the average daily electricity consumption of this sample is 0.52 kW.h, calculate 99% two-sided confidence interval for...

Allocating efficient factors of production has determined the success of those unicorns”. Do you agree with...

Allocating efficient factors of production has determined the success of those unicorns”. Do you agree with that statement? Why?

t the end of 20X4, Sherpa Lighting Ltd. has a large stock of incandescent lighting fixtures that are becoming obsolete due to a new trend to low energy fluorescent and LED li...

At the end of 20X4, Sherpa Lighting Ltd. has a large stock of incandescent lighting fixtures that are becoming obsolete due to a new trend to low energy fluorescent and LED lighting fixtures. The current inventory of incandescent fixtures has a cost of $170,000. The sales manager of Sherpa estimates that the inventory can be sold through the normal course of business over the next several reporting quarters for approximately $150,000. Sales personnel are given a 10% commission on sales....

Jekyll Co. has concluded that additional equity financing will be needed to expand operations and that...

Jekyll Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $54 to $50.60 ($54 is the rights-on price; $50.60 is the ex-rights price, also known as the when-issued price). The company is seeking $18 million in additional funds with a per-share subscription price equal to...

Jekyll Co. has concluded that additional equity financing will be needed to expand operations and that...

Jekyll Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $55 to $51.00 ($55 is the rights-on price; $51.00 is the ex-rights price, also known as the when-issued price). The company is seeking $23 million in additional funds with a per-share subscription price equal to...

Jekyll Co. has concluded that additional equity financing will be needed to expand operations and that...

Jekyll Co. has concluded that additional equity financing will be needed to expand operations and that the needed funds will be best obtained through a rights offering. It has correctly determined that as a result of the rights offering, the share price will fall from $25 to $22.10 ($25 is the rights-on price; $22.10 is the ex-rights price, also known as the when-issued price). The company is seeking $10 million in additional funds with a per-share subscription price equal to...

Subjects