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Carlsbad Corporation's sales are expected to increase from $5 million in 2016 to $6 million in...

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Finance

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 6%, and the forecasted retention ratio is 40%. Use the AFNequation to forecast the additional funds Carlsbad will need forthe coming year. Write out your answer completely. For example, 5million should be entered as 5,000,000. Round your answer to thenearest cent.

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