Additional Funds Needed Equation for Cold Duck Manufacturing INC.?

Reported sales on 777,500 at the end of last year, this year sales are expected to grow by 6% to maintain current profit margin of 20% and the dividend payout ratio of 15%. The firm's total assets equaled 400,000 and were operated at full capacity. The balance sheet shows the following current liabilities: accounts payable of 65,000, notes payable of 40,000 and accrued liabilities of 60,000 based on the AFN equation, what is the firms AFN for the coming year?

-123,155 -160,102 -110,840 or -147,786

A negatively signed AFN value represents?

a. A shortage of internal funds

b. A surplus of internal funds

c. A point at which the funds generated within the firm are equal demands for funds

Because of excess funds, Cold Duck is thinking of raising its dividend payout ratio to satisfy shareholders. Which percentage of its earning can Cold Duck pay to shareholders without need to raise external capital? HINT: What can they increase it to before its dividend payout ratio before the AFN becomes positive?

a. 90% b.85.5% c.76.5% d. 63%