1. As sales are expected to increase by 15% from $8 million in 2016 to $9.2 million in 2017. As assets total $5 million at the end of 2016. A is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2016 current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable and $450,000 of accruals. The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%.

1. Use the AFN equation to forecast As additional funds needed for the coming year.
2. Now suppose that As 2016 assets had been $7 million. Calculate AFN and explain why the AFN is different from part a
3. Now assume that company uses $5 million in assets as before, but now assume that the company has a dividend payout of 25%. Calculate AFN and explain why the AFN is different from part a.
4. Assume we are back as the original scenario of $5 million in assets and that the payout ratio is 40%. Using the Self-Supporting Growth Rate equation. How large a percentage increase in sales can A achieve without having to raise funds externally? What is the total dollar amount of sales that A can sustain without having to raise any funds externally?