Ch $09$: Assignment $-$ Corporate Valuation and Financial Planning

When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate

internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for BMC this

year?

$$67,200$

$$73,600$

$$64,000$

$$60,800$

In addition, Bohemian Manufacturing Company is expected to generate net income this year. The firm will pay out some of its earnings as dividends

but will retain the rest for future asset investment. Again, the more a firm generates internally from its operations, the less it will have to raise

externally from the capital markets. Assume that the firm's profit margin and dividend payout ratio are expected to remain constant.

Given the preceding information, BMC expects to generate

from operations that will be added to its existing retained earnings.

$($Hint: Round your answer to the nearest whole dollar.$)$

According to the AFN equation and projections for Bohemian Manufacturing Company, the firm's AFN is