Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

6. Problem 16.08 Click here to read the eBook: The AFN Equation Problem Walk-Through LONG-TERM FINANCING NEEDED At year-end 2016, total assets for Arrington Inc.

image text in transcribed
6. Problem 16.08 Click here to read the eBook: The AFN Equation Problem Walk-Through LONG-TERM FINANCING NEEDED At year-end 2016, total assets for Arrington Inc. were $1.7 million and accounts payable were $420,000. Sales, which in 2016 were $2.6 million, are expected to increase by 20% in 2017. Total assets and accounts payable are proportional to sales, and that relationship will be maintained; that is, they will grow at the same rate as sales. Arrington typically uses no current liabilities other than accounts payable. Common stock amounted to $445,000 in 2016, and retained earnings were $210,000. Arrington plans to sell new common stock in the amount of $120,000. The firm's profit margin on sales is 79; 60% of earnings will be retained a. What were Arrington's total liabilities in 2016? Write out your answer completely, For example, 25 millon should be entered as 25,000,000. Round your answer to the b. How much new long-term debt financing will be needed in 2017? Write out your answer completely. For example, 25 million should be entered us 25,000,000. Do not round your intermediate calculations. Round your answer to the nearest cent. (Hint: AFN - New stock = New long-term debt.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Real Estate Finance

Authors: Sherry Shindler Price

1st Edition

0934772185, 9780934772181

More Books

Students also viewed these Finance questions

Question

Describe three forms of conflict from the work of Lewin.

Answered: 1 week ago

Question

Identify and define the eight channels of nonverbal communication

Answered: 1 week ago