Howton & Howton Worldwide (HHW) Is Planning Its Operations for the Coming

question 17

Multiple Choice

Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN) . The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.

• A) $31.9
• B) $33.6
• C) $35.3
• D) $37.0
• E) $38.9

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