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In January 2018 the total assets of Kabel Pintas Berhad were RM270 million. The firm’s present capital structure, considered to be optimal is as follows: Long-term debts Shareholders Funds Total Liabilities & Equity RM135 million RM135 million RM270 million New bonds with 10 percent coupon were sold at par value. Ordinary shares currently trading at RM24 per share can be issued by the company at RM18 per share. Shareholders expect a rate of return of 4 percent dividend yield and 8 percent growth in earnings. Retained earnings are expected to be RM13.5 million. The corporate tax rate is 28%. Assume that the total budget for asset expansion (inclusive of fixed assets and working capital but exclusive of depreciation) is RM135 million (a) To maintain the present capital structure, how much of the capital budget must the company finance by equity? (b) How much of the required equity funds will be generated internally? Externally?