Mortgage Chest reported EAC of $10,000,000 last year. From that, the company paid a dividend of $1.20 on each of its 1 million common shares outstanding. The optimal capital structure is 40 percent bonds, 30 percent preferred equity, and 30 percent common equity. The company's tax rate is 35 percent and for the upcoming year, reinvested profits are expected to increase by 7.5 percent from the level recorded the previous year.
What is the maximum investment that Mortgage Chest can make in new projects before it must issue new common shares.
A.$35,833,333
B.$29,333,333
C.$31,533,333
D.$32,620,689