Explain Answer

You have been asked to forecast the additional funds needed (AFN) for Houston, Hargrove, & Worthington (HHW), which is planning its operation for the coming year. The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN or the coming year change if HIV increased the payout from 10% to the new and higher level? All dollars are in millions. Last year's sales So Sales growth rate 9 Last year'stotal assets A Last year's profit margin PM O a. $31.9 $50.0 $15.0 $20.0 10.0% $300.0Last year's accounts payable 40%Last year's notes payable $500.0Last year's accruals 20.0%Initial payout ratio b. $37.0 O c. $35.3 d. $33.6 e. $38.9