$2$A$).$ Use the AFN equation to estimate Hatfield$$s required new external capital for $2020$ if the sales growth rate is $11\mathrm{.}1\%.$ Assume that the firm$$s $2019$ ratios will remain the same in $2020.($Hint: The company was operating at full capacity in the previous year.$)$

$2$B$).$ Define the term capital intensity. Explain how a decline in capital intensity would affect the AFN, other things held constant. Would economies of scale combined with rapid growth affect capital intensity, other things held constant? Also, explain how changes in each of the following would affect AFN, holding other things constant: the growth rate, the amount of accounts payable, the profit margin, and the payout ratio

$2$C$).$ Define the term self$-$supporting growth rate. What is Hatfield$$s self$-$supporting growth rate? Would the self$-$supporting growth rate be affected by a change in the capital intensity ratio, or the other factors mentioned in the previous question? Other things held constant, would the calculated capital intensity ratio change over time if the company were growing and were also subject to economies of scale and$/$or lumpy assets?

Available Data

Growth rate in sales $($g$)$

$11\mathrm{.}1\%$

Sales $($S$0)$

$$9,001$

Required assets $($A$0*)$

$$6,390$

Spontaneous liabilities $($L$0*)$

$$1,620$

Forecasted sales $($S$1)$

$$10,000$

Increase in sales $(\backslash$Delta S $=$ gS$0)$

$$999$

Profit margin $($M$)$

$3\mathrm{.}30\%$

Assets$/$Sales $($A$0*/$S$0)$

$71\mathrm{.}0\%$

Payout ratio $($POR$)$

$33\mathrm{.}7\%$

Spont. Liab.$/$Sales $($L$0*/$S$0)$

$18\mathrm{.}0\%$

M $=3\mathrm{.}30\%$

POR $=33\mathrm{.}7\%$

$1-$POR $=66\mathrm{.}3\%$

S$0=$ $$9,001$

A$0*=$ $$6,390$

L$0*=$ $$1,620$