Green Caterpillar Garden Supplies Inc. has the following end-of-year balance sheet:

Green Caterpillar Garden Supplies Inc. Balance Sheet For the Year Ended on December 31

AssetsLiabilities

Current Assets:Current Liabilities:

Cash and equivalents$150,000Accounts payable$250,000

Accounts receivable400,000Accrued liabilities150,000

Inventories350,000Notes payable100,000

Total Current Assets$900,000Total Current Liabilities$500,000

Net Fixed Assets:Long-Term Bonds1,000,000

Net plant and equipment$2,100,000Total Debt$1,500,000

(cost minus depreciation)

Common Equity

Common stock800,000

Retained earnings700,000

Total Common Equity$1,500,000

Total Assets$3,000,000Total Liabilities and Equity$3,000,000

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, Green Caterpillar Garden Supplies Inc. generated $300,000 net income on sales of $12,500,000. The firm expects sales to increase by 19% this coming year and also expects to maintain its long-run dividend payout ratio of 35%.

Suppose Green Caterpillar Garden Supplies Inc.s assets are fully utilized. Use the additional funds needed (AFN) equation to determine the increase in total assets that is necessary to support Green Caterpillar Garden Supplies Inc.s expected sales. (Note: Do not round intermediate calculations.)

$570,000

$598,500

$541,500

$513,000

When a firm grows, some liabilities grow spontaneously along with sales. Spontaneous liabilities are a source of capital that the firm will generate internally, so they reduce the need for external capital. How much of the total increase in assets will be supplied by spontaneous liabilities for Green Caterpillar Garden Supplies Inc. this year? (Note: Do not round intermediate calculations.)

$68,400

$76,000

$79,800

$72,200

In addition, Green Caterpillar Garden Supplies Inc. is expected to generate net income this year. The firm will pay out some of its earnings 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 externally from the capital markets. Assume that the firms profit margin and dividend payout ratio are expected to remain constant.

Given the preceding information, Green Caterpillar Garden Supplies Inc. is expected to generate $from operations that will be added to retained earnings. (Note: Do not round intermediate calculations.)

According to the AFN equation and projections for Green Caterpillar Garden Supplies Inc., the firms AFN is $. (Note: Do not round intermediate calculations.)