5. Excess capacity adjustments

Water and Power Co. (W&P) currently has $490,000 in total assets and sales of $1,820,000. Half of W&Ps total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 21% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is $____________ . (Note: Round your answer to the nearest whole number.)

W&P was using its fixed assets at only 92% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? (Note: Round your answer to the nearest whole number.)

$1,978,261

$2,077,174

$2,176,087

$2,373,913

When you consider that W&Ps fixed assets were being underused, its target fixed assets to sales ratio should be __________%. (Note: Round your answer to two decimal places.)

When you consider that W&Ps fixed assets were being underused, how much fixed assets must W&P raise to support its expected sales for next year? (Note: Round your answer to the nearest whole number.)

$30,507

$33,281

$27,734

$29,121