Question 2: Recall that in 2018 Executive Fruit ended the year with $1,000,000 of fixed assets...

Question 2:

Recall that in 2018 Executive Fruit ended the year with $1,000,000 of fixed assets and net working capital, and it had $3,000,000 of sales. In other words, each dollar of sales required $.70 of net assets. The company forecasts that sales in 2019 will increase by $300,000. Therefore, if the ratio of net assets to sales remains constant, assets in 2019 will need to rise by $.70 of this increase can be financed by reinvested earnings, which in 2019 are $40,000. So the amount of external financing needed is,

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