QUESTION 5
A firm has:
• a 6% profit margin
• a 40% total liabilities / assets ratio
• a capital intensity ratio of 2
• a dividend payout ratio of 40%
• current sales ($S_0$) of $10 million
Using the AFN equation, what is the amount of additional funds needed if the firm expects a 5% increase in sales next year?
$348,000
$422,000
$279,000
$222,000