Bulldogs Inc. recently reported net income of P5,000,0000. The firm has P40,000,000 total assets. Next year, National Inc. is forecasting a 20% increase in sales. The firm also estimates that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention ratio is maintained at 75%. If the sales increase, the profit margin will remain at its current level. The company is operating at full capacity. How much is the increase in retained earnings that will contribute to cover the increase in asset? * 3,750,000 750,000 4,500,000 36,000,000
Bulldogs Inc. recently reported net income of P5,000,0000. The firm has P40,000,000 total assets. Next year, National Inc. is forecasting a 20% increase in sales. The firm also estimates that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention ratio is maintained at 75%. If the sales increase, the profit margin will remain at its current level. The company is operating at full capacity. How much is the increase in retained earnings that will contribute to cover the increase in asset? * 3,750,000 750,000 4,500,000 36,000,000
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 20P
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Question
56
![Bulldogs Inc. recently reported net income of P5,000,0000. The firm has P40,000,000 total
assets. Next year, National Inc. is forecasting a 20% increase in sales. The firm also estimates
that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention
ratio is maintained at 75%. If the sales increase, the profit margin will remain at its current
level. The company is operating at full capacity. How much is the increase in retained earnings
that will contribute to cover the increase in asset? *
O 3,750,000
O 750,000
O 4,500,000
O 36,000,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F88253c27-8699-4b5d-be83-16ba934891d1%2F76785195-8628-4e0b-811e-b600947c724f%2Fduzz4ia_processed.png&w=3840&q=75)
Transcribed Image Text:Bulldogs Inc. recently reported net income of P5,000,0000. The firm has P40,000,000 total
assets. Next year, National Inc. is forecasting a 20% increase in sales. The firm also estimates
that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention
ratio is maintained at 75%. If the sales increase, the profit margin will remain at its current
level. The company is operating at full capacity. How much is the increase in retained earnings
that will contribute to cover the increase in asset? *
O 3,750,000
O 750,000
O 4,500,000
O 36,000,000
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