In Problem 27, suppose the firm wishes to keep its debt-equity ratio constant. What is EFN now?

Data from problem 27

The most recent financial statements for Hopington Tours Inc. follow. Sales for 2013 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, and accounts payable increase spontaneously with sales. If the firm is operating at full capacity and no new debt or equity is issued, what is the external financing needed to support the 20 percent growth rate in sales?

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HOPINGTON TOURS INC. 2012 Statement of Comprehensive Income $ 929,000 Sales Costs 723,000 Other expenses Earnings before interest and taxes Interest paid 19,000 $ 187,000 14,000 Taxable income $ 173,000 Taxes (35%) 60,550 $ 112,450 Net income Dividends $33,735 Addition to retained earnings 78,715 HOPINGTON TOURS INC. Statement of Financial Position as of December 31, 2012 Assets Liabilities and Owners' Equity Current assets Current liabilities $ 25,300 $ 68,000 17,000 $ 85,000 $158,000 Cash Accounts payable Notes payable Accounts receivable 40,700 Total Inventory Total 86,900 $152,900 Long-term debt Owners' equity Common stock and paid-in surplus Retained earnings Fixed assets Net plant and equipment $140,000 $413,000 182,900 Total $322,900 $565,900 Total assets $565,900 Total liabilities and owners' equity