Outlaws is a general goods retail chain in the High Plains region.Forecast the financial statements for Outlaws for Year 7.Use the percent of sales method based on Year 6 and the assumptions listed below.Please note the ratios provided in the table which are useful for making the forecast.
Sales growth of 5.5%.The cost of debt is 6.25%.The tax rate is 35%.The depreciation rate is 6%.CAPEX is $300 Million.The following accounts are constant: Goodwill and common stock.Long term debt is the PLUG variable.No dividends.
Forecast the financial statements for Outlaws.What are the additional funds needed (AFN) in Year 7? The AFN is the change in the plug account from Year 6 to Year 7.
A) -$381 million
B) -$290 million
C) -$91 million
D) $127 million
E) $189 million
Correct Answer:
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