Wagner Industrial Motors, which is currently operating at full capacity, has sales of $2,450, current assets of $790, current liabilities of $480, net fixed assets of $1,640, and a 5 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to increase by 10 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year? a. $12.25 b. $245.00 c. $257.25 d. $182.75 e. $60.25

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter3: Evaluation Of Financial Performance
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Wagner Industrial Motors, which is currently operating at full capacity, has sales
of $2,450, current assets of $790, current liabilities of $480, net fixed assets of
$1,640, and a 5 percent profit margin. The firm has no long-term debt and does
not plan on acquiring any. The firm does not pay any dividends. Sales are expected
to increase by 10 percent next year. If all assets, short-term liabilities, and costs
vary directly with sales, how much additional equity financing is required for next
year?
a. $12.25
b. $245.00
c. $257.25
d. $182.75
e. $60.25
Transcribed Image Text:Wagner Industrial Motors, which is currently operating at full capacity, has sales of $2,450, current assets of $790, current liabilities of $480, net fixed assets of $1,640, and a 5 percent profit margin. The firm has no long-term debt and does not plan on acquiring any. The firm does not pay any dividends. Sales are expected to increase by 10 percent next year. If all assets, short-term liabilities, and costs vary directly with sales, how much additional equity financing is required for next year? a. $12.25 b. $245.00 c. $257.25 d. $182.75 e. $60.25
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