BaconFace
Oct 6, 2012, 11:00 AM
Hi there,
I am not sure how to go about solving this problem:
A firm has $25 million in assets and its optimal capital structure is 60% equity. If the firm has $14 million in retained earnings, at what asset level will the firm need to issue additional stock? (Assume no growth in retained earnings.)
I won't list the possible answers because I was hoping someone might be able to point me in the right direction with a correct formula so that I can solve for myself? Thanks in advance for your time!
I am not sure how to go about solving this problem:
A firm has $25 million in assets and its optimal capital structure is 60% equity. If the firm has $14 million in retained earnings, at what asset level will the firm need to issue additional stock? (Assume no growth in retained earnings.)
I won't list the possible answers because I was hoping someone might be able to point me in the right direction with a correct formula so that I can solve for myself? Thanks in advance for your time!