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Vang Enterprises plans to retain $15 million of earnings for the year. It wants to finance...

Vang Enterprises plans to retain $15 million of earnings for the year. It wants to finance its capital budget using a target capital structure of 30% debt, 10% preferred stock, and 60% common equity. Calculate the retained earnings breakpoint to help determine how large the firm’s capital budget could be before it must issue new common stock.

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Answer #1

Retained Earnings Breakeven Point = Addition to Retained Earnings/Equity weight 15000000/0.6 25000000!

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