You Have Been Asked to Forecast the Additional Funds Needed

question 2

Multiple Choice

You have been asked to forecast the additional funds needed (AFN) for Houston, Hargrove, & Worthington (HHW) , which is planning its operation for the coming year. 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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Definitions:

Renal Hilum

The entry and exit site for structures servicing the kidneys, such as the ureter, blood vessels, and nerves.

Renal Calculi

Medical term for kidney stones, which are hard deposits of minerals and salts that form inside the kidneys.

Nephron Tubules

The microscopic tubes in the kidney where urine is formed and various substances are filtered, reabsorbed, or secreted.

Proximal Convoluted

Refers to the Proximal Convoluted Tubule, a part of the nephron in the kidney involved in the reabsorption of water, ions, and other substances from the filtered blood.