Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and hasa staff to advise customers and help them set up their new computers. Upton's balance sheet as of December 31, 2019, is shown here (millions of dollars):CashReceivablesInventories5Total current assets.Net fixed assetsmillion%$3.526.058.0$87.535.0Accounts payableNotes payableLine of creditAccrualsTotal current liabilities.Mortgage loanCommon stockRetained earningsTotal assets$122.5Total liabilities and equitySales for 2019 were $375 million and net income for the year was $11.25 million, so the firm's profit margin was 3.0%. Upton paid dividends of $4.5 million tocommon stockholders, so its payout ratio was 40%. Its tax rate was 25%, and it operated at full capacity. Assume that all assets/sales ratios, (spontaneousliabilities)/sales ratios, the profit margin, and the payout ratio remain constant in 2020. Do not round intermediate calculations.$9.018.00a. If sales are projected to increase by $71.25 million, or 19%, during 2020, use the AFN equation to determine Upton's projected external capitalrequirements. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimalplaces.8.5$35.56.015.066.0$122.5$ 37.55b. Using the AFN equation, determine Upton's self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having toemploy nonspontaneous external funds? Round your answer to two decimal places.

AFN ( Additional Funds needed) = Increase in Assets-Spontaneous increase in Liabilities-increase in…

a. If sales are projected to increase by $71.25 million, or 19%, during 2020, use the AFN equation to determine Upton's projected external capital requirements. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places. $ 37.55 million b. Using the AFN equation, determine Upton's self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having employ nonspontaneous external funds? Round your answer to two decimal places.

a. If sales are projected to increase by $71.25 million, or 19%, during 2020, use the AFN equation to determine Upton's projected external capital requirements. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places. $ 37.55 million b. Using the AFN equation, determine Upton's self-supporting growth rate. That is, what is the maximum growth rate the firm can achieve without having employ nonspontaneous external funds? Round your answer to two decimal places.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 7P: Upton Computers makes bulk purchases of small computers, stocks them in conveniently located...

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