The Optical Scam Company has forecast a sales growth rate of 15 percent 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 pro forma balance sheet for next year and confirm the external funds needed that you calculated in part (a).

c. Calculate the sustainable growth rate for the company.

d. Can the company 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 $21,860,000 Costs 19,450,000 $ 2,410,000 Taxable income Taxes 602,500 $ 1,807,500 Net income $ 361,500 Dividends Addition to retained earnings 1,446,000 Balance Sheet Liabilities and Owners' Equity Assets Current $ 6,900,000 Short-term debt $ 5,100,000 $ 5,800,000 assets Long-term debt Fixed 17,300,000 assets $ 3,100,000 Common stock Accumulated retained earnings 10,200,000 Total equity 13,300,000 Total Total liabilities and $24,200,000 equity $24,200,000 assets