{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

03 ModelHW3

# 03 ModelHW3 - 9-2 AFN = \$4 000 000...

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 9-2 AFN = , , \$4 000 000 \$1,000,000 (0.1)(\$1,000,000) (\$300,000)(0.3) 000 000 , \$5, = (0.8)(\$1,000,000) - \$100,000 - \$90,000 = \$800,000 - \$190,000 = \$610,000. The capital intensity ratio is measured as A*/S0. This firm's capital intensity ratio is higher than that of the firm in Problem 11-1; therefore, this firm is more capital intensive--it would require a large increase in total assets to support the increase in sales. 9-4 S2003 = \$2,000,000; A2003 = \$1,500,000; CL2003 = \$500,000; NP2003 = \$200,000; A/P2003 = \$200,000; Accruals2003 = \$100,000; PM = 5%; d = 60%; A*/S0 = 0.75. AFN = (A*/S0)S - (L*/S0)S - MS1(1 - d) = (0.75)S - = = = = = \$1,200,000 = \$2,068,965.52 = , \$300 000 S -(0.05)(S1)(1 - 0.6) , , \$2 000 000 (0.75)S - (0.15)S - (0.02)S1 (0.6)S - (0.02)S1 0.6(S1 - S0) - (0.02)S1 0.6(S1 - \$2,000,000) - (0.02)S1 0.6S1 - \$1,200,000 - 0.02S1 0.58S1 S1. Sales can increase by \$2,068,965.52 - \$2,000,000 = \$68,965.52 without additional funds being needed. ...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online