Allison Engines Corporation has established a target capital structure of 40 percent debt and 60 percent common equity. The firm expects to earn $150,000 in after-tax income during the coming year, and it will retain 40 percent of those earnings. What is the break point of retained earnings??
A. $125,000?
B. ?$100,000
C. ?$150,000
D. ?$110,000
E. ?$135,000
Answer: B
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