Crum expects sales to grow by 50% in 2019, and operating costs should increase at the same rate. Fixed assets were being operated at 60% of capacity in 2018, but all other assets were used to full capacity. Underutilized fixed assets cannot be sold. Current assets and spontaneous liabilities should increase at the same rate as sales during 2019. The company plans to finance any external funds needed as 100% notes payable. Determine AFN after one pass. After taking financing feedbacks into account, determine AFN after the second pass.

2019

2018 Forecast Financing

Actual Assumption 1^st Pass Feedback 2^nd Pass

Sales $1,000.00

Operating costs 800.00

EBIT $ 200.00

Interest 16.00

EBT $ 184.00

Taxes (40%) 73.60

Net Income $ 110.40

*Dividends (60%) 66.24

Addition to R.E. $ 44.16

Current Assets $ 700.00

Net fixed Assets 300.00

Total assets $ 1,000.00

A/P and Accruals $ 150.00

N/P @ 8.00% 200.00

Common stock 150.00

Retained earnings 500.00

Total Liab & Equity $ 1,000.00

AFN

*Dividend ratio is 60% of net income

Interest

AFN Financing: Weights: Dollars: Interest

Expense:

N/P 100%