In the Industrial Supply Company example (Table 4.4) it was assumed that the company’s fixed assets were being used at nearly full capacity and that net fixed assets would have to increase proportionately as sales increased. Alternatively, suppose that the company has excess fixed assets and that no increase in net fixed assets is required as sales are increased. Assume that the company plans to maintain its dividend payments at the same level in 2014 as in 2013. Determine the amount of additional financing needed for 2014 under each of the following conditions:
Increase In Sales Increase In Expenses
a. 3,750,000 3,750,000
b. 3,000,000 2,800,000
c. 4,500,000 4,000,000