More on the AFN $($Additional Funds Needed$)$ equation

Blue Elk Manufacturing reported sales of $$890,000$ at the end of last year, but this year, sales are expected to grow by $7\%.$ Blue

maintain its current profit margin of $22\%$ and dividend payout ratio of $15\%.$ The following information was taken from Blue Elk's balance sheet:

Based on the AFN equation, the firm's AFN for the current year is

A positively signed AFN value represents:

a shortage of internally generated funds that must be raised outside the company to finance the company's forecasted future growth.

a point at which the funds generated within the firm equal the demands for funds to finance the firm's future expected sales

requirements.

a surplus of internally generated funds that can be invested in physical or financial assets or paid out as additional dividends.

Because of its excess funds, Blue Elk Manufacturing is thinking about raising its dividend payout ratio to satisfy shareholders. Blue Elk could pay out

of its earnings to shareholders without needing to raise any external capital. $($Hint: What can Blue Elk increase its dividend payout ratio

to before the AFN becomes positive?$)$