National Co. forecasts that its earnings per share will be P4.00 this year.  The company has 500,000,000 shares of stock outstanding. National Co. estimates that its capital budget for the upcoming year will be P800,000,000, and it is committed to funding the entire capital budget.  The company is also committed to maintaining its dividend of P3.20 per share, and it wants to avoid issuing

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter14: Capital Structure Management In Practice
Section: Chapter Questions
Problem 24P
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National Co. forecasts that its earnings per share will be P4.00 this year.  The company has 500,000,000 shares of stock outstanding. National Co. estimates that its capital budget for the upcoming year will be P800,000,000, and it is committed to funding the entire capital budget.  The company is also committed to maintaining its dividend of P3.20 per share, and it wants to avoid issuing new common stock.  The company’s capital structure consists of debt and common stock.  Given the above constraints, what portion of the P800,000,000 capital budget will be funded with debt?

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