4. More on the AFN (Additional Funds Needed) equation Blue Elk Manufacturing reported sales of $720,000 at the end of last year, but this year, sales are expected to grow by 9%. Blue Elk expects to maintain its current profit margin of 24% and dividend payout ratio of 25%. The following information was taken from Blue Elks balance sheet: Total assets: $475,000 Accounts payable: $75,000 Notes payable: $25,000 Accrued liabilities: $80,000 Based on the AFN equation, the firms AFN for the current year is . A negatively-signed AFN value represents a surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends. a shortage of internally generated funds that must be raised outside the company to finance the companys forecasted future growth. a point at which the funds generated within the firm equal the demands for funds to finance the firms future expected sales requirements. Because of its excess funds, Blue Elk is thinking about raising its dividend payout ratio to satisfy shareholders. What percentage of its earnings can Blue Elk pay to shareholders without needing to raise any external capital? (Hint: What can Blue Elk increase its dividend payout ratio to before the AFN becomes positive?) 84.7 76.2 63.5 80.5