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3. Excess capacity adjustments Water and Power Co. (W&P) currently has $610,000 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 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is $ W&P was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? O $1,628,421 O $1,915,789 O $2,298,947 O $2,011,578 When you consider that W&P's fixed assets were being underused, its target fixed assets to sales ratio should be When you consider that W&P's fixed assets were being underused, how much fixed assets must W&P raise to support its expected sales for next year? O $50,920 O $58,194 %. O $48,495 O $41,221

3. Excess capacity adjustments Water and Power Co. (W&P) currently has $610,000 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 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is $ W&P was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? O $1,628,421 O $1,915,789 O $2,298,947 O $2,011,578 When you consider that W&P's fixed assets were being underused, its target fixed assets to sales ratio should be When you consider that W&P's fixed assets were being underused, how much fixed assets must W&P raise to support its expected sales for next year? O $50,920 O $58,194 %. O $48,495 O $41,221

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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3. Excess capacity adjustments Water and Power Co. (W&P) currently has $610,000 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 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is $ W&P was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? O $1,628,421 O $1,915,789 O $2,298,947 O $2,011,578 When you consider that W&P's fixed assets were being underused, its target fixed assets to sales ratio should be %. When you consider that W&P's fixed assets were being underused, how much fixed assets must W&P raise to support its expected sales for next year? O $50,920 O $58,194 O $48,495 O $41,221
Transcribed Image Text:3. Excess capacity adjustments Water and Power Co. (W&P) currently has $610,000 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 22% in the next year. According to the AFN equation, the amount of additional assets required to support this level of sales is $ W&P was using its fixed assets at only 95% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets? O $1,628,421 O $1,915,789 O $2,298,947 O $2,011,578 When you consider that W&P's fixed assets were being underused, its target fixed assets to sales ratio should be %. When you consider that W&P's fixed assets were being underused, how much fixed assets must W&P raise to support its expected sales for next year? O $50,920 O $58,194 O $48,495 O $41,221
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