Net fixed assets and the rest are current assets
Course:- Financial Management
Reference No.:- EM13891894

Assignment Help
Assignment Help >> Financial Management

1. Water and Power Co. (W&P) currently has $540,000 in total assets and sales of $1,820,000. Half of W&P’s total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 21% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is:

a) 113,400

b) 124,740

c) 136,080

d) 147,420

2. W&P was using its fixed assets at only 94.00% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets?

a) $1,645,745

b) $1,742,553

c) $1,839,362

d) $1,936,170

3. When you consider that W&P’s fixed assets were being underused, its target fixed assets to sales ratio should be:


b) 12.555%


d) 16.740%

4. When you consider that W&P’s fixed assets were being underutilized, W&P must raise _____________   in additional fixed assets to support its expected sales next year.





Put your comment

Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the
The debentures are callable two years from now at $1,090. If you require a 20 percent rate of return on investments of this perceived risk level, should you buy these deben
Fabrice is looking to buy a new plug-in hybrid vehicle. The purchase price is $12,500 more than a similar conventional model. However, he will receive a $5,600 federal tax cre
Simplicity Printers is considering a project with the following cash flows: Initial Outlay = $126,000 Cash Flows: Year 1 = $34,000 Year 2 = $69,000 Year 3 = $64,000 If the app
An investor believes that there will be a big jump in a stock price, but is uncertain as to the direction. - Identify six different strategies the investor can follow and ex
A company is considering a 5-year project that opens a new product line and requires an initial outlay of $85,000. The assumed selling price is $97 per unit, and the variable
Scanlin, Inc., is considering a project that will result in initial after tax cash savings of $1.76 million at the end of the first year, and these savings will grow at a rate
Lee plans to retire in 22 years with a nest egg of $8M. He has already saved $500,000 in an investment account that generates a nominal rate of return of 12%, compounded quart