Goldilochs Inc

question 2

Multiple Choice

Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has $10.5 million in total assets. The firm's chief financial officer is projecting a 20% increase in sales. If the firm's sales do increase by 20%, it is expected that spontaneous liabilities will increase by $500,000. The firm currently pays out 30% of its net income to shareholders. Assuming that all assets are expected to grow with sales, how much in additional funds will Goldilochs need from external sources to fund the expected growth?

• A) $340,000
• B) $299,000
• C) $321,000
• D) $360,000

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Definitions:

Present Value

Today's value of future cash flows or a lump sum, calculated using an established return rate.

Discounted

The process of determining the present value of a payment or a series of payments made in the future, using a specific discount rate.

9%

Typically refers to a specific interest rate or percentage in financial contexts, such as a loan interest rate or investment return rate.

Annual Rate

The interest rate for a period of one year, often used to compare the yield of financial products or loans.