How much would the afn for the coming year change

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Problem 1: Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm's additional funds needed (AFN). 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.

Last year's sales = S0$300
Last year's accounts payable$50
Sales growth rate = g 40%
Last year's notes payable$15
Last year's total assets = A0 *$500
Last year's accruals$20
Last year's profit margin = PM20%
Initial payout ratio10%
New payout ratio50%

Reference no: EM132879241

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