03 ModelHW3 - 9-2 AFN = , , $4 000 000 $1,000,000...

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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. ...
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This note was uploaded on 05/12/2010 for the course BUSINESS BS525 taught by Professor Matthews during the Winter '10 term at Drexel.

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