Your Company Is Expected to Earn $4

question 188

Multiple Choice

Your company is expected to earn $4.0 million in net income next year of which it will pay out 40% in dividends. If equity represents 50% of your capital, what is the breakpoint on the MCC where new stock will have to be issued?

• A)$2.4 million
• B)$3.2 million
• C)$4.0 million
• D)$4.8 million
• E)$8.0 million