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Broussard Skateboard's sales are expected to increase by 20% from $8.2 million in 2019 to $9.84 million in 2020. Its assets totaled $5 million at the end of 2019.
Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 3%, and the forecasted payout ratio is 75%. Use the AFN equation to
Additional Fund Needed = Projected Increase in assets - Spontanouns Increase in liability - Increase in Retained Earnings after the dividend payout
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