Answer:
the additional funds needed is $667,500
Explanation:
The computation of the additional funds by using AFN is shown below:
AFN is
= Increase in assets - increase in liabilities - addition to retained earnings
= ($4,000,000×25%) - ($900,000 × 25%) - 10,750,000 × .04( 1 - 0.75)
= $1,000,000 - $225,000 - $107,500
= $667,500
hence, the additional funds needed is $667,500
We simply applied the above formula so that the correct value could come
And, the same is to be considered
