Axis Chemical Co. reported sales of $720,000 at the end of last year, but this year, sales are expected to grow by 6%. Axis Chemical Co. expects to maintain its current profit margin of 24% and dividend payout ratio of 15%. The following information was taken from Axis Chemical Co.s balance sheet:

Total assets:	$500,000
Accounts payable:	$65,000
Notes payable:	$40,000
Accrued liabilities:	$70,000

Based on the AFN equation, the firms AFN for the current year is __________ (rounded to the nearest whole dollar).

a) -133,793

b) -147, 172

c) -153,862

d) -167, 241

A positively signed AFN value represents:

a) A shortage of internally generated funds that must be raised outside the company to finance the companys forecasted future growth

b) A point at which the funds generated within the firm equal the demands for funds to finance the firms future expected sales requirements

c) A surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends

Because of its excess funds, Axis Chemical Co. is thinking about raising its dividend payout ratio to satisfy shareholders. The percentage of earnings that Axis Chemical Co. can pay to shareholders without needing to raise any external capital is_________________ (Hint: What can Axis Chemical Co. increase its dividend payout ratio to before the AFN becomes positive?)

a) 44.02%

b) 61.63%

c) 79.24%

d) 88.04%