Question
3. Excess capacity adjustments Water and Power Co. (W&P) currently has $645,000 in total assets and sales of $1,820,000. Half of W&P's total assets
3. Excess capacity adjustments Water and Power Co. (W&P) currently has $645,000 in total assets and sales of $1,820,000. Half of W&P's total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 20% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is $ W&P was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? O $1,724,210 $1,915,789 $1,628,421 $1,532,631 When you consider that W&P's fixed assets were being underused, its target fixed assets to sales ratio should be %. When you consider that W&P's fixed assets were being underused, how much fixed assets must W&P raise to support its expected sales for next year? $45,150 $36,120 $40,635 $38,378
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