Stephens, Inc. (SI) reported net income of $120,000 for the fiscal year that just ended and expects net income to grow at 5% per year indefinitely. SI also reported current assets of $700,000, net fixed assets of $220,000 and total assets of $920,00 for most recent fiscal year. SI’s current liabilities of $100,000 and long-term debt of $540,000. Assume that retained earnings is the only other equity account and that current assets and current liabilities vary with sales, but the other accounts do not. Additionally, assume that SI pays out 80% of net income as dividends. What is the addition to retained earnings (by how much will owner’s equity change) forecast for next year? Select one: a. $25,200 b. $32,000 c. $100,800 d. $126,000
Stephens, Inc. (SI) reported net income of $120,000 for the fiscal year that just ended and expects net income to grow at 5% per year indefinitely. SI also reported current assets of $700,000, net fixed assets of $220,000 and total assets of $920,00 for most recent fiscal year. SI’s current liabilities of $100,000 and long-term debt of $540,000. Assume that
$25,200
$32,000
$100,800
$126,000
None of the above.
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