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You are siven the following financlal Information about your compary $11,000,000 00 $7.150,000.00 700.000.00 3150,000.00 $280,000.00 $2,870,000.00 $1.148,000.00 1722,000.00 $516,600.00 EBIT Taxes (40%) Net Income Dividends Paid Out Year 0 Year 1 ( Year 1 (2 Cash $1100,000.00 $3,300,000.00 Inventories $4400,000.00 Current Assets Gross Plant &Equipment Less: Depreciation Net Plant & Equipment $8,800,000.00 $7,000,000.00 $2,800,000.00 $4,200,000.00 $13,000,000.00 Total Assets Year O $2750,000.00 $1,500,000.00 $1.100,000.00 $5350,000.00 $2,000,000.00 $3,300000.00 $2,350,000.00 Liabilities & Equity Year 1(1Yar 1 (2) Notes Payable Accruals Current Liabilities Long-Term Debt Common Stock Retained Earnings Total Liabilities&Equity $13,000,000.00 300,000.00 2,350,000.00 13 000.000.00 Now make the following assumptions Sales are expected to increase by 25 percent in Year 1. Operating Costs will remain 65% of Sales. Fbxed assets are being used at 75 percent of capacity Fixed assets are lumpy. If the frm must add fixed assets, it must add a lump-sum of $3,000,000. Fbxed assets are currently being depreclated on a straight lIine basis over a 10-year period. New fixed assets will also be depreclated on a straight line basis over 10 years. In the future, the firm wishes to maintaln Its cash balance at a constant level of $900,000 regardless of the level of sales. All other assets and spontaneous liabilities can be expressed as a percent of sales and will grow proportionately with sales The before-tax interest rate on notes payable and long-term debt is currently 8 percent. Over the coming year it will remain at 8% for the long-term debt, but will increase to 10% for the notes payable. The tax rate will remain at 40 percent. Because of a special tax bill, the firm will increase its dividend payout rate to 100 percent of net income in Year 1, regardless of whether any new equity is issued. The firm has decided that any additional funds needed (AFN) will be raised by issuing new common stock Using the spreadsheet method, and given the information above, do a first pass and calculate the additional funds needed, then do a second pass, assuming that all funds are raised by the issuance of new common stock, and determine the new return on equity that will then arise. Answer in decimal format, to 3 decimal places, truncated. For example, if your answer is 12.28%, enter "0.122" Question 6 s pts You are glven the following information regarding sales and Inventory levels over time for your firm 2010 $12,502.00 $6855.36 2011 $13 456.00 $7,282.75 2012 $17,845.00-1$9,249.02 2013 $15,326.00$8,120.51 2014-1-s14464.00-15773433 Given this information, determine the level of safety stock that the firm holds. $1,193.09 $1,131.72 $1,254.46 $1,070.35 O $1,008.98

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