6. The Additional Funds Needed (AFN) equation Aa Aa Cold Duck Manufacturing Inc. has the following end-of-year balance sheet Cold Duck Manufacturing Inc. Balance Sheet For the Year Ended on December 31 Assets Current Assets Liabilities Current Liabilities Cash and equivalents Accounts receivable Inventories $150,000Acounts payable $250,000 150,000 100,000 $500,000 1,000,000 $1,500,000 Accrued liabilities 400,000 350,000 $900,000 Notes payable Total Current Assets Total Current Liabilities Net Fixed Assets: Long-Term Bonds Net plant and equipment (cost minus depreciation) $2,100,000 Total Debt Common Equity Common stock 800,000 700,000 $1,500,000 $3,000,000 Retained earnings Total Common Equity Total Liabilities and Equity Total Assets $3,000,000 The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year. In the year that just ended, Cold Duck Manufacturing Inc. generated $400,000 net income on sales of $14,500,000. The firm expects sales to increase by 15% this coming year and also expects to maintain its long-run dividend payout ratio of 45%. Suppose Cold Duck's assets are fully utilized. Usingthe additional funds needed (AFN) equation, the increase in total assets that is necessary to support Cold Duck Manufacturing Inc.'s expected sales is When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Cold Duck this year? O $60,000 O $48,000 O $51,000 O $57,000 Now, Cold Duck expects to generate a positive net income next year, and to distribute some of its earnings as dividends. It will retain the remainder of the firm's forecasted net income (as retained earnings) for future asset investment. As the company generates more internal funding, it will have less to raise externally via the capital markets Assuming that, next year, Cold Duck's net profit margin and dividend payout ratio will be the same as this year's values, then Cold Duck is expected to generate $ of additional retained earnings financing