Need for External Financing To increase production capacity by 20%, a $5 million investment is needed. The firm wants to maintain a 40% debt-to-asset ratio, and continue to pay 25% of income as...

Need for External Financing

To increase production capacity by 20%, a $5 million investment is needed. The firm wants to maintain a 40% debt-to-asset ratio, and continue to pay 25% of income as dividends. Net Income was $3 million.

A. How much External Financing is needed?

B. How much new Debt must they Issue?

C. How much new external equity should they issue?