3. The Additional Funds Needed (AFN) equation Aa Aa E Bohemian Manufacturing Company has the following end-of-year balance sheet: Bohemian Manufacturing Company Balance Sheet For the Year Ended on December 31 Assets Liabilities Current Assets: Current Liabilities: Cash and equivalents $150,000 Accounts payable Accounts receivable 400,000 Accrued liabilities Inventories 350,000 Notes payable Total Current Assets $900,000 Total Current Liabilities Net Fixed Assets: Long-Term Bonds Net plant and equipment $2,100,000 Total Debt (cost minus depreciation) Common Equity Common stock Retained earnings Total Common Equity Total Assets $3,000,000 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 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, Bohemian Manufacturing Company generated $300,000 net income on sales of $12,500,000. The firm expects sales to increase by 15% this coming year and also expects to maintain its long-run dividend payout ratio of 30%. Suppose BMC's assets are fully utilized. Using the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support a firm's expected sales, it is projected that BMC will require $450,000 Suppose BMC's assets are fully utilized. Using the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support a firm's expected sales, it is projected that BMC will require $450,000 in additional assets. 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 BMC this year? $48,000 $66,000 $57,000 $60,000 In addition, Bohemian Manufacturing Company 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. Given the preceding information, BMC expects to generate $ from operations that will be added to its existing retained earnings. (Be sure to round your answer to the nearest whole dollar.) According to the AFN equation and projections for Bohemian Manufacturing Company, the firm's AFN is