5. Excess capacity adjustments

Western Gas & Electric Co. (WG&E) currently has $540,000 in total assets and sales of $1,400,000. Half of WG&E's total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 19% in the next year.

QUESTION: 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.)

QUESTION: WG&E 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.)

A. $1,597,826

B. $1,521,739

C. $1,826,087

D. $1,217,391

QUESTION: When you consider that WG&E's fixed assets were being underused, its target fixed assets to sales ratio should be%. ? (Note: Round your answer to two decimal places.)

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

A. $20,477

B. $30,715

C. $26,876

D. $25,596