5-7. Based on the information in Problem 5-6, assume that Booth has just completed a review of its net operating working Additional Funds Neededcapital policies and found that it can reduce its DSO to 60 and achieve an inventory turnover of 4.57% without impacting sales or profits, based on a cost of goods sold of $1,600. a. Recalculate the additional funds Booth requires to achieve its growth target. Answer b. Assume Booth needed $360 in additional funds for Problem 5-6. Using your answer in part a, how much less will Booth pay in future interest costs, annually, given a 9% interest rate on all additional funds borrowed? Answer 5.8. Pro Forma Statements and Ratios Cavuto makes bulk purchases of men's and women's shoes, stocks them in conveniently located warehouses, and ships them to its chain of retail stores. Cavuto's balance sheet as at December 31, 2015, is shown here millions of dollars) Cash Receivables Inventories Total current assets Net fixed assets $ 3.5 26.0 58.0 87.5 35.0 Accounts payable S 9.0 Notes payable 18.0 Accruals 8.5 Total current liabilities 355 Mortgage loan 6.0 Common stock 15.0 Retained earnings 66.0 Total liabilities and equity $122.5 Total assets S122.5 Sales for 2015 were $350 million, while net income for the year was $14.35 million. Cavuto paid dividends of $5.74 million to common shareholders. The firm is operating at full capacity. Assume that all ratios remain constant a. If sales are projected to increase by T0 million, or 20%, during 2016, use the AFN equation to determine Cavuto's projected external capital requirements. b. Using the AFN equation, determine Cavuto's self-supporting growth rate. That is what is the maximum growth rate the firm can achieve without having to employ external funds? c Construct Cavuto's pro forma balance sheet for December 31, 2016. Assume that all external capital requirements are met by bank loans and are reflected in notes payable. Assume the company's profit margin and dividend payout ratio remain constant. 5-6. Additional Funds Needed The Booth Company's sales are forecast to increase from $1,000 in 2015 to $2,000 in 2016. Here is the December 31, 2015 balance sheet: Cash Accounts receivable Inventories Net fixed assets S 100 200 200 500 Accounts payable Notes payable Accruals Long-term debt Common stock Retained earnings Total liabilities and equity $ 50 150 50 400 100 250 $1,000 Total assets $1.000 T Booth's fixed assets were used to only 50% of capacity during 2015, but its current assets were at their proper levels. All assets except fixed assets increase at the same rate as sales and fixed assets would also increase at the same rate if the current excess capacity did not exist. Booths after tax profit margin is forecasted to be 5%, and its payout ratio will be 60%. What is Booth's additional funds needed (AFN) for the coming year