Answer:
$ 620,000
Explanation:
<u>The increase is assets is the amount the firm will need to finance:</u>
Current Assets: 3,840,000
Forecast Assets: 3,840,000 x ( 1 + 20%) = 4,608,000
Assets to finance: 4,608,000 - 3,840,000 = 768,000
<u>A portion of this will be financed by the supplier as the accounts payable will increase:</u>
Curent Account Payable: 740,000
Forecast A/P: 740,000 x (1 + 20%) = 888,000
Financiation provided by the supplier: 888,000 - 740,000 = 148,000
<u>The rest will requiere addtional financiation through equity or other means.</u>
Total Financiation needed: 768,000 - 148,000 = 620,000
