Energy and Utility Co. (E&U) currently has $800,000 in total assets and sales of $2,200,000. Half of E&U's total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 18% in the next year. E&U was using its fixed assets at only 88% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 20P
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Energy and Utility Co. (E&U) currently has
$800,000 in total assets and sales of $2,200,000.
Half of E&U's total assets come from net fixed
assets, and the rest are current assets. The firm
expects sales to grow by 18% in the next year.
E&U was using its fixed assets at only 88% of
capacity last year. How much sales could the firm
have supported last year with its current level of
fixed assets?
Transcribed Image Text:Energy and Utility Co. (E&U) currently has $800,000 in total assets and sales of $2,200,000. Half of E&U's total assets come from net fixed assets, and the rest are current assets. The firm expects sales to grow by 18% in the next year. E&U was using its fixed assets at only 88% of capacity last year. How much sales could the firm have supported last year with its current level of fixed assets?
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