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Breakpoint on the MCC where new stock will have to be issued

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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

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Solution Summary

The solution calculates the breakpoint.

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