12-3 Cold Duck Manufacturing Inc. reported sales of $890,000 at the end of last year, but this year, sales are expected to grow by 7%. Cold Duck expects to maintain its current profit margin of 24% and dividend payout ratio of 15%. The following information was taken from Cold Duck's balance sheet: Total assets: $400,000 Accounts payable: $80,000 Notes payable: $45,000 -186,342 Accrued liabilities: $80,000 - 221,836 -177,469 -204,089 Based on the AFN equation, the firm's AFN for the current year is A positively signed AFN value represents: O a point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales requirements. O a surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends. O a shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth. Because of its excess funds, Cold Duck Manufacturing Inc. is thinking about raising its dividend payout ratio to satisfy shareholders. Cold Duck could pay out of its earnings to shareholders without needing to raise any external capital. (Hint: What can Cold Duck increase its dividend payout ratio to before the AFN becomes positive?) 88.4 92.6 69.4 74.1 10.16 The decision process Before making capital budgeting decisions, finance professionals often generate, review, analyze, select, and implement long-term investment proposals that meet firm-specific criteria and are consistent with the firm's strategic goals. Companies often use several methods to evaluate the project's cash flows and each of them has its benefits and disadvantages. Based on your understanding of the capital budgeting evaluation methods, which of the following conclusions about capital budgeting are valid? Check all that apply. The discounted payback period improves on the regular payback period by accounting for the time value of money. For most firms, the reinvestment rate assumption in the MIRR is more realistic than the assumption in the IRR. NPV Managers have been slow to adopt the IRR, because percentage returns are a harder concept for them to grasp. IRR is the single best method to use when making capital budgeting decisions