A Firm Has the Following Balance Sheet: Fixed Assets

question 122

Multiple Choice

A firm has the following balance sheet: Fixed assets are being used at 80 percent of capacity; sales for the year just ended were $200; sales will increase $10 per year for the next 4 years; the profit margin is 5 percent; and the dividend payout ratio is 60 percent.Assume that fixed assets cannot be sold.What are the total external financing requirements for the entire 4 years, i.e., the total AFN for the 4-year period?

• A) $4.00
• B) $2.00
• C) −$0.80 (Surplus)
• D) −$14.00 (Surplus)
• E) $0

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