Answer:
The firm can increase assets by $20 million.
Explanation:
We can calculate at what asset level will the firm need to issue additional stock by calculating the difference between the current asset level and the new asset level.
Total equity = ($50 million) x 60% + $12 million
Total equity = $42 million.
This $42 million will be 60% = 0.60
Total asset will be 100% = $42 / 0.60
Total asset = $70 million.
Difference = $70 million - $50 million
Difference = $20 million
