Ch 09: Assignment - Corporate Valuation and Financial Planning Fuzzy Button Clothing Company has the following end-of-year balance sheet: The firm is currently in the process of forecasting sales, asset requirements, and required funding for the coming year, In the year that just ended, Fuzzy Button Clothing Company generated $300,000 net income on sales of $14,500,000. The firm expects sales to increase by 184 this coming year and also expects to maintain iss long-run dividend payout ratio of 40%. Suppose Fuzzy Button's assets are fully utilzed. Using the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support a firm's expected sales, it is projected that Fuzxy Button will require in additional assets. When a firm grows, some liablities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate intemally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by. spontaneous liabilities for Fuzzy Button this year? $57,600 $79,200 $61,200 $72,000 In add tion, Fuzzy Button Clothing Company is expected to generate net income this yeac- The firm will pay out some of its eamings 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 extemaily from the capital markets. Assume that the firm's profit margin and dividend psyout ratio are expected to remain constant. Given the preceding informstion, Fuzzy Button expects to generate from operations that will be added to its existing tetained earnings. (Hint: Round your anwer to the nearest whole doitar) According to the AFN equation and projections for Fuzzy Button Clothing Company, the firm's AFN is