You have been asked to forecast the additional funds needed (AFN) for Houston, Hargrove, and Worthington, which is planning its operation for the coming year. The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of change in the payout ratio from the 10% that was used in the past to 25% which the firms investment bankers have recommended. Based on the AFN equation by how much would the AFN for the coming yesr change if HHW increased the payout from 10% to the new and higher level?

Last years sales=So $300

Sales growth rate=g 40%

Last years total assets=A0* $500

Last years profit margin=PM 20.0%

Last years accounts payabke $50.0

Last years notes payable $15.0

Last years accruals $20.0

Initial payout ratio 10.0%

a $12.6

b 11.2

c 8.4

d 15.4

e 9.8