Question
CARLSBAD CORPORATION'S SALES ARE EXPECTED TO INCREASE FROM $5MILL IN 2019 to $6MILL IN 2020, OR BY 20%. ITS ASSETSTOTALED $2MILL AT THE END OF
CARLSBAD CORPORATION'S SALES ARE EXPECTED TO INCREASE FROM $5MILL IN 2019 to $6MILL IN 2020, OR BY 20%. ITS ASSETSTOTALED $2MILL AT THE END OF 2019. CARLSBAD IS AT FULL CAPACITY, SO ITS ASSETS MUST GROW IN PROPORTION TO PROJECTED SALES. AT THE END OF 2019, CURRENT LIABILITIES ARE $1MILL, CONSISTING OF $250,000 OF ACCOUNTS PAYABLE, $500,000 OF ACCRUED LIABILITIES.ITS PROFIT MARGIN IS FORECASTED TO BE 7%, AND THE FORECASTED RETENTION RATIO IS 30%. USE THE AFN EQUATION TO FORECAST THE ADDITIONAL FUNDS CARLSBAD WILL NEED FOR THE COMING YEAR. WRITE YOUR ANSWER COMPLETELY. FOR EXAMPLE, 5MILL SHOULD BE ENTERED AS 5,000,000. ROUND YOUR ANSWER TO THE NEAREST DOLLAR.
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