16-1 AFN EQUATION Carsbad Corporation's sales ar expected to increase from $5 million in 2016 to $6 million in2017, or by 20%. Its assets totaled $3 million at the end of 2016. Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of 2016, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. Its profit margin is forecasted to be 3%, and the forecasted retention ratio is 30%. Use the AFN equation to forecast the additional funds Carlsbad will need for the changing year. Answer = $446,000 Need answer for 16-3

16-3 AFN EQUATION Refer to problem 16-1 and assume that the company had $3 million in assets at the end of 2016. However, now assume that the company pays no dividends. Under these assumptions, what additional funds would be needed for the coming year? Why is this AFN different from the one you found in problem 16-1?