Homework Answers
Net Finance Required = Forecasted Increase in Assets - Forecasted Increase in Spontaneous Liabilities - Forecasted retained Earnings
Forecasted retained Earnings = Forecasted Net Income(1-Dividend Payout ratio)
= $51700(1-0.101) = $46,478.3
Forecasted Increase in Spontaneous Liabilities = Increase in Accounts Payable = $9900
Beginning Total Equity & Liability = $297700+$119000
= $416,700
Beginning Total Equity & Liability = Beginning Total Assets
Increase in Total Assets = Ending Total Assets - Beginning Total Assets
= $501700-$416700 = $85000
Net Finance Required = $85000-$9900-$46478.3
= $28,621.7
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You forecast sales to increase to
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next year. Using the percent of sales method, forecast next
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The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus
depreciation (effectively expensing capital expenditures).
However, we will still include depreciation forecasting in this
chapter and in these problems in anticipation of...
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