7. As a reminder the following assignment was given at the end of class to reinforce the methodology of the AFN Model:

Period Variables	Current	Projected		Current	Projected		Current	Projected
Sales	$100,000	$120,000	Assets			Liab.&Own -ers Equ.
Cost	$ 75,000		Short Term	$60,000		Debt	$40,000
Net Income			Long Term	$20,000		Equity	$40,000

As we said in class all models are built on assumptions:

1 Dividend payout ratio is 50% therefore, the retention rate is the remainder

2 All assets and noninterest bearing liabilities vary is the same proportion as sales

3 Use the following equation to find the additional funding needed (AFN):

AFN) = LTAo/So (S) + LTSAo (S) - (APo + ALo) (S) -Net Inc_0o/So (S1) x Retention Rate.

REQUIRED:

7a. Find the AFN using the model equation above

7b Fill in the blanks in the table above.

7c. Write a paragraph on findings or conclusion after your perform the algorithmic modelling