Problem:
Mad inc. has a capital structure consisting of 30 percent debt and 70 percent common equity financing. The company has $400 million in net income and plans to pay out 47.5 percent of their net income as dividends.
Required:
Question: What is the maximum amount of new financing that the company can raise without selling new common stock?
A) $400million
B) $300million
C) $271million
D) $571million
Note: Explain the solution in detail.