1) Starbucks expects sales to increase by15% from $8 million in 2018 to $9.2 million in 2019. Its assets totaled $5 million at the end of 2018. It is already operating at full capacity so assets must grow with sales. At year end 2018 Current Liabilities totaled $1.4 million comprised of $450,000 Accounts payable, $500,000 Notes Payable and $450,000 Accrued Liabilities. The A/T profit margin is forecasted to be 6% and the payout ratio is 40%. Using the AFN formula, what are Franklins additional funds needed in 2019?

$0

$208,000

$283,800

$583,800

2) A company has 2018 sales of $10 million and COGS of $7 million. Additionally, Inventory for 2018 was $1 million. If sales are expected to increase by 5% and gross margin is expected to be maintained, but the COO wants inventory turnover to improve to 7.5x, what would be the forecast for Inventory for 2019?

$750,000

$980,000

$1,000,000

$1,500,000

3) a shop chain has current sales of $10 million. Its net margin is 5% and it has a dividend payout ratio of 40%. The balance sheet is showing a retained earnings balance of $2.4 million. If sales are projected to increase 10% next year and margins and payout ratios will be maintained, what would you forecast for a retained earnings balance for next year?

$2.73 million

$2.64 million

$2.33 million

$2.40 million

4) When would one be most likely to use MIRR as a decision criterion?

a) When there are non-normal cash flows

b) When there is a concern about the ability to reinvest cash flows at a high return

c) both a and b

d) Always

5) Which of the following are excluded from capital budgeting cash flows?

Allocated fixed costs

Sunk costs

Interest costs

All of the above

6) Assume you have two mutually exclusive projects A&B. Each project costs $15 million with the following cash flows:

Year	Project A	Project B
1	$8 million	$20 million
2	$10 million	$10 million
3	$20 million	$ 5 million

Based upon using the profitability index and a cost of capital of 10%, which project would you chose if you only had $15 million to spend :

Project A

Project B

Neither