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1. Broussard Skateboard's sales are expected to increase by 25% from $7.4 million in 2016 to...

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Finance

1. Broussard Skateboard's sales are expected to increase by 25%from $7.4 million in 2016 to $9.25 million in 2017. Its assetstotaled $5 million at the end of 2016. Broussard is already at fullcapacity, so its assets must grow at the same rate as projectedsales. At the end of 2016, current liabilities were $1.4 million,consisting of $450,000 of accounts payable, $500,000 of notespayable, and $450,000 of accruals. The after-tax profit margin isforecasted to be 3%, and the forecasted payout ratio is 70%. Whatwould be the additional funds needed? Do not round intermediatecalculations. Round your answer to the nearest dollar.

2. Assume that an otherwise identical firm had $6 million intotal assets at the end of 2016. The identical firm's capitalintensity ratio (A0*/S0) is(a)(higher than, lower than, or equal to) thanBroussard's; therefore, the identical firm is (b)(less,more, the same) capital intensive - it would require(c)(a smaller, a larger, or the same) increase intotal assets to support the increase in sales.

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