Calculate United's total assets if the firm expects sales to grow by 15% this year and the earnings after tax will be $50,000.United paid $20,000 in dividends last year and expects to increase dividends 10% this year.The firm will need additional financing of $25,000 to finance the expected growth.
A)$393,333
B)$590,000
C)$226,667
D)$616,000

Question

Quizplus · Accepted Answer

$25,000 = (A/S)(.15S) - ($40,000/S)(.15S) - ($50,000 - $22,000) A = $393,333

Calculate United's Total Assets If the Firm Expects Sales to Grow