(OR) 1 B. Colind Enterprises is planning to purchase some new equipment next year. With this new equipment, the company expects sales to increase from $20,000,000 to $24,000,000. The company knows that current assets, fixed assets, accounts payable, and accrued expenses increase in direct proportion with sales. The company's net profit margin on sales is 10%, and the company plans to pay 40% of its after-tax earnings in dividends. A copy of the company's current balance sheet is given below Colind Enterprises Balance Sheet Current assets $6,000,000 Fixed assets 10,000,000 Total assets $16.000.000 Accounts payable $3,000,000 Accrued expenses 2,000,000 Notes Payable 1.000.000 Long-term debt 3,000,000 Common stock 4,000,000 Retained earnings 3.000.000 Total liabilities and net worth $16.000.000 i What are Colind's total financing needs next year? [ 7.5 marks] i. Given the firm's projections and dividend payment plans, what are its discretionary financing needs? [ 10 marks] Activate Windows (OR) 1 B. Colind Enterprises is planning to purchase some new equipment next year. With this new equipment, the company expects sales to increase from $20,000,000 to $24,000,000. The company knows that current assets, fixed assets, accounts payable, and accrued expenses increase in direct proportion with sales. The company's net profit margin on sales is 10%, and the company plans to pay 40% of its after-tax earnings in dividends. A copy of the company's current balance sheet is given below Colind Enterprises Balance Sheet Current assets $6,000,000 Fixed assets 10,000,000 Total assets $16.000.000 Accounts payable $3,000,000 Accrued expenses 2,000,000 Notes Payable 1.000.000 Long-term debt 3,000,000 Common stock 4,000,000 Retained earnings 3.000.000 Total liabilities and net worth $16.000.000 i What are Colind's total financing needs next year? [ 7.5 marks] i. Given the firm's projections and dividend payment plans, what are its discretionary financing needs? [ 10 marks] Activate Windows
