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Northern California Heating and Cooling, Inc., has a six-month backlog of orders for it's patented solar heating system.

Northern California Heating and Cooling, Inc., has a six-month backlog of orders for it’s patented solar heating system. To meet this demand, management plans to expand production capacity by 35 percent with a $10 million investment in plant and machinery. The firm wants to maintain a 40 percent debt/assets ratio in its capital structures; it also wants to maintain its past dividend policy of distributing 45 percent of the prior year’s net income. Last year, net income was $5 million. How much external equity must Northern California seek at the beginning of next year to expand capacity as desired?
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Finance-8088000.doc

Question:Northern California Heating and Cooling Inc. has a six month backlog of orders for its
patented solar heating system. To meet this demand, management plans to expand
production capacity by...

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