External Funds Needed The Optical Scam Company has forecast a 20 per cent sales growth rate for next year. The current financial statements are shown here:

a. Using the equation from the chapter, calculate the external funds needed for next year.
b. Construct the firm's statement of financial position for next year, and confirm the external funds needed you calculated in part (a).
c. Calculate the sustainable growth rate for the company.
d. Can Optical Scam eliminate the need for external funds by changing its dividend policy? What other options are available to the company to meet its growth objectives?

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Income Statement Sales Costs Taxable income Taxes Net income $30.400,000 26,720,000 $3,680,000 1,288,000 $2,392,000 Dividends $ 956,800 Addition to retained earnings ,435,200 Balance Sheet Assets Liabilities and Equity $6,400,000 4,800,000 Current assets $ 7,200,000 Short-term debt Long-term debt Fixed assets 17,600,000 3,200,000 10,400,000 $13,600,000 $24,800,000 Common stock Accumulated retained earnings Total equity Total assets $24,800,000 Total liabilities and equit)y