1.

Carlsbad Corporation's sales are expected to increase from $5million in 2016 to $6 million in 2017, or by 20%. Its assetstotaled $3 million at the end of 2016. Carlsbad is at fullcapacity, so its assets must grow in proportion to projected sales.At the end of 2016, current liabilities are $1 million, consistingof $250,000 of accounts payable, $500,000 of notes payable, and$250,000 of accrued liabilities. Its profit margin is forecasted tobe 4%.

1. Assume that the company pays no dividends.
   Under these assumptions, what would be the additional funds neededfor the coming year? Write out your answer completely. For example,5 million should be entered as 5,000,000. Round your answer to thenearest cent.
   $
2. 
   
3. Why is this AFN different from the one when the company paysdividends?
   
   1. Under this scenario the company would have a lower level ofretained earnings, which would decrease the amount of additionalfunds needed.
   2. Under this scenario the company would have a higher level ofretained earnings, which would reduce the amount of additionalfunds needed.
   3. Under this scenario the company would have a higher level ofretained earnings, which would reduce the amount of assetsneeded.
   4. Under this scenario the company would have a higher level ofspontaneous liabilities, which would reduce the amount ofadditional funds needed.
   5. Under this scenario the company would have a lower level ofretained earnings, which would increase the amount of additionalfunds needed.
   
   -Select of the the above

2.

Austin Grocers recently reported the following 2016 incomestatement (in millions of dollars):

	Sales	$700
	Operating costs including depreciation	500
	EBIT	$200
	Interest	40
	EBT	$160
	Taxes (40%)	64
	Net income	$96
	Dividends	$32
	Addition to retained earnings	$64

For the coming year, the company is forecasting a 30% increasein sales, and it expects that its year-end operating costs,including depreciation, will equal 60% of sales. Austin's tax rate,interest expense, and dividend payout ratio are all expected toremain constant.

1. What is Austin's projected 2017 net income? Enter your answerin millions. For example, an answer of $13,000,000 should beentered as 13. Round your answer to two decimal places.
   $ ??????million
2. 
   
3. What is the expected growth rate in Austin's dividends? Do notround your intermediate calculations. Round your answer to twodecimal places.
   ??? %