1. The Additional Funds Needed (AFN) equation Cold Duck Manufacturing Inc. has the following end-of-year balance sheet: Cold Duck Manufacturing Inc. Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents Accounts payable Accounts receivable Accrued liabilities Inventories Notes payable Total Current Liabilities Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) Total Assets $150,000 400,000 350,000 $900,000 $2,100,000 $3,000,000 Long-Term Bonds Total Debt Common Equity Common stock Retained earnings Total Common Equity Total Liabilities and Equity $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 800,000 700,000 $1,500,000 $3,000,000

1. The Additional Funds Needed (AFN) equation Cold Duck Manufacturing Inc. has the following end-of-year balance sheet: In addition, Cold Duck Manufacturing Inc, is expected to generate net income this year. The firm will pay out some of its earnings as dividends but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less is will have to raise externally from the capital markets. Assume that the firm's profit margin and dividend payout ratio are expected to remain constant. Given the preceding information, Cold Duck Manufacturing Inc: is expected to generate 5 from operations that will be adoed to retained eamings. (Note: Do not round intermediate calculations.) According to the AFN equation and projections for Cold Duck Manufacturing Inc., the firm's AFN is s (Note: Do not round intermediate calculations.) The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Cold Duck Manufacturing Inc generated $450,000 net income on sales of $14,000,000. The firm expects sales to increase by 19% this coming veaf and also expects to maintain its iong-run dividend payout ratio of 35%. Suppose Cold Duck Manufacturing Incis assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Cold Duck Manufacturing Incis expected sales. (Note: Do not round intermediate calculations.) $570,000 $596,500 $655,500 $513,000 When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabiities for Cold Duck Manufacturing Inc this year? (Note: Do not round intermediate calculations.) $68,400 $79,800 $76,000 $87,400