Garr Tool Co. estimates its investment to be ($0.25) in assets for each dollar of new sales.

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Garr Tool Co. estimates its investment to be \($0.25\) in assets for each dollar of new sales. However, \($0.04\) in profits will be produced by each dollar of additional sales, of which \($0.01\) can be reinvested in the company. If sales rise by \($400,000\) the following year from their current level of \($3.5\) million, and the ratio of spontaneous liabilities to sales is 10 percent, what will be Garr’s discretionary financing needs?

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Foundations Of Finance

ISBN: 9781292318738

10th Global Edition

Authors: Arthur Keown, John Martin, J. Petty

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