Following is the balance sheet of Cyan Inc.:
?
Current assets $ 5,000 Accounts payable $ 1,000
Net fixed assets 10,000 Accruals 1,000
Long-term debt 5,000
Common equity 8,000
Total $15,000 Total $15,000
?
Fixed and current assets are fully utilized, and the sales/assets and sales/spontaneous liabilities ratios remain constant. Next year, the firm expects sales to increase by 50 percent. It also expects to retain $2,000 of next year's earnings within the firm. What is the next year's additional external funding requirement, or additional funds needed (AFN)?
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A. ?No additional funds are required.
B. ?$3,500
C. ?$4,500
D. ?$5,500
E. ?$6,500
Answer: C
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