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Howton and Howtown Worldwide is planning its operations for the coming year and the CEO wants you to forcase the firm's additional funds needed (AFN). The firm is iperating at full capacity. Data for use in the forcast are shown below. however the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50% which the firm's investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if Howton and Howton increased the payout from 10% to the new and higher level? All dollars are in millions.

last years sales = SO $300 last years accounts payable $50
Sales growth rate=g 40% last years notes payable $15
last years total assessts = AO $500 last years accurals $20
last years profit margin = PM 20% initial payout ratio 10%

 

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