Multiple Choice
If a firm uses external financing as a plug item, has a new capital budget of $2 million, a net income of $3 million, and a plowback ratio of 40%, how much should be raised in external funds?
A) $200,000
B) $600,000
C) $800,000
D) $1,200,000 Plowback = $3 million x .40 = $1.2 million
Correct Answer:
Verified
Correct Answer:
Verified
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