Answer is complete but not entirely correct. 4,972.00 EFN

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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Question
The most recent financial statements for Martin, Inc. are shown here:

**Income Statement**
- Sales: $22,000
- Costs: -13,200
- Taxable Income: $8,800
- Taxes (21%): -1,848
- Net Income: $6,952

**Balance Sheet**
- Assets: $61,600
- Debt: $25,000
- Equity: $36,600
- Total Assets: $61,600
- Total Liabilities and Equity: $61,600

Assets and costs are proportional to sales. Debt and equity are not. A dividend of $880 was paid, and Martin wishes to maintain a constant payout ratio. Next year’s sales are projected to be $25,740. What is the external financing needed? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

**Answer:**

The external financing needed (EFN) is calculated as $4,972.00, though the answer is noted as complete but not entirely correct.
Transcribed Image Text:The most recent financial statements for Martin, Inc. are shown here: **Income Statement** - Sales: $22,000 - Costs: -13,200 - Taxable Income: $8,800 - Taxes (21%): -1,848 - Net Income: $6,952 **Balance Sheet** - Assets: $61,600 - Debt: $25,000 - Equity: $36,600 - Total Assets: $61,600 - Total Liabilities and Equity: $61,600 Assets and costs are proportional to sales. Debt and equity are not. A dividend of $880 was paid, and Martin wishes to maintain a constant payout ratio. Next year’s sales are projected to be $25,740. What is the external financing needed? (Do not round intermediate calculations. Round your answer to 2 decimal places.) **Answer:** The external financing needed (EFN) is calculated as $4,972.00, though the answer is noted as complete but not entirely correct.
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