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External financing

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?

Solution Preview

Total funds needed are 3,000,000

Net Income = 4,000,000
A plowback ratio of 35% ...

Solution Summary

The solution explains how to calculate the amount of external financing needed.

$2.19