2. The Additional Funds Needed (AFN) equation Green Moose Industries has the following end-of-year balance sheet: Green Moose Industries Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Accounts payable $250,000 Cash and equivalents Accounts receivable Accrued liabilities 150,000 $150,000 400,000 350,000 $900,000 Inventories Notes payable Total Current Liabilities Long-Term Bonds Total Debt 100,000 $500,000 1,000,000 Total Current Assets Net Fixed Assets: Net plant and equipment (cost minus depreciation) $2,100,000 $1,500,000 Common Equity Common stock Retained earnings Total Common Equity 800,000 700,000 $1,500,000 Total Common Equity Total Liabilities and Equity $1,500,000 $3,000,000 Total Assets $3,000,000 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, Green Moose Industries generated $450,000 net income on sales of $13,500,000. The firm expects sales to increase by 16% this coming year and also expects to maintain its long-run dividend payout ratio of 30%. Suppose Green Moose Industries's assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Green Moose Industries's expected sales. $408,000 $384,000 O $480,000 576,000 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 liabilities for Green Moose Industries this year? $76,800 $54,400 $64,000 $51,200 In addition, Green Moose Industries 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 it 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. from operations that will be added to retained Given the preceding information, Green Moose Industries is expected to generate $ earnings. According to the AFN equation and projections for Green Moose Industries, the firm's AFN is $