Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Futuristic Development ( FD ) generated $ 3 million in sales last year with assets equal to $ 6 million. The firm operated at full

Futuristic Development (FD) generated $3 million in sales last year with assets equal to $6 million. The firm operated at full capacity last year. According to FD's balance sheet, the only current liabilities are accounts payable, which equals $600,000. The only other liability is long-term debt, which equals $1,035,000. The common equity section is comprised of 400,000 shares of common stock with a book value equal to $3 million and $1,365,000 of retained earnings. Next year, FD expects its sales will increase by 20 percent. The company's net profit margin is expected to remain at its current level, which is 16 percent of sales. FD plans to pay dividends equal to $0.40 per share. It also plans to issue 60,000 shares of new common stock, which will raise $500,000. Estimate the additional funds needed (AFN) to achieve the forecasted sales next year. Round your answer to the nearest dollar.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Options Futures And Other Derivatives

Authors: John C. Hull

11th Edition

013693997X, 9780136939979

More Books

Students also viewed these Finance questions

Question

What is Larmors formula? Explain with a suitable example.

Answered: 1 week ago