For the next fiscalyear, you forecast net income of $ 50,000 and ending assets of $500,000. Yourfirm's payout ratio is 10.0 %. Your beginningstockholders' equity is $300,000 and your beginning total liabilities are $120,000. Yournon-debt liabilities such as accounts payable are forecasted to increase by $10,000. Assume your beginning debt is $100,000. What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep yourdebt-equity ratioconstant?

The Tax Cuts and Jobs Act of 2017 temporarily allows100% bonus depreciation(effectively expensing capitalexpenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.