A Firm Has $50 Million in Assets and Its Optimal

question 63

Multiple Choice

A firm has $50 million in assets and its optimal capital structure is 60% equity. If the firm has $12 million in retained earnings available to invest, at what asset level will the firm need to issue additional stock? (Assume no growth in retained earnings.)

• A) The firm should have already issued additional stock.
• B) The firm can increase assets by $30 million.
• C) The firm can increase assets by $20 million.
• D) There is insufficient information to determine an answer.

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Definitions:

Right Atrium

The right upper chamber of the heart that receives deoxygenated blood from the body through the vena cava.

Right Ventricle

One of the four chambers of the heart, responsible for pumping deoxygenated blood to the lungs.

Pathology

The medical discipline that studies the causes, nature, and effects of diseases through the examination of body tissues, organs, bodily fluids, and autopsies.

Congestive Heart Failure

A chronic condition where the heart is unable to pump blood effectively, leading to fluid buildup in the body.