If a firm uses external financing as a plug item, has a new capital budget of $3 million, a net income of $4 million, and a plowback ratio of 35%, how much should be raised in external funds?© BrainMass Inc. brainmass.com October 24, 2018, 9:15 pm ad1c9bdddf
Total funds needed are 3,000,000
Net Income = 4,000,000
A plowback ratio of 35% ...
The solution explains how to calculate the amount of external financing needed.
Acme External Financing Alternatives
Having previously identified the location of its greenfield investment, Acme, a multi-billion dollar public MNE that is incorporated in the U.S., must next obtain external financing for its proposed overseas production facility. It has been estimated that the acquisition will cost $500M and all funds will be secured in the U.S. Your job is to explain to this committee some of the financial aspects of this acquisition.
Deliverable: At the next steering committee meeting, you will provide a detailed presentation of the characteristics of the various external financing alternatives, including the advantages and disadvantages of each. Your report should conclude with a recommendation of which alternative (or combination of alternatives) should be used to finance the overseas investment.View Full Posting Details