Attempts $$ Keep the Highest $\frac{0}{1}$

Problem $16\mathrm{.}01$

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AFN EQUATION

Carlsbad Corporation's sales are expected to increase from $$5$ million in $2016$ to $$6$ million in $2017,$ or by $20\%.$ Its assets totaled $$2$ million at the end of $2016.$ Carlsbad is at full capacity, so its assets must grow in proportion to projected sales. At the end of $2016,$ current liabilities are $$1$ million, consisting of $$250,000$ of accounts payable, $$500,000$ of notes payable, and $$250,000$ of accrued liabilities. Its profit margin is forecasted to be $3\%,$ and the forecasted retention ratio is $25\%.$ Use the AFN equation to forecast the additional funds Carlsbad will need for the coming year. Write out your answer completely. For example, $5$ million should be entered as $5,000,000.$ Round your answer to the nearest cent.

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