19. Calculating EFN (LO4, CFA8) The most recent financial statements for Moose Tours, Inc., follow. Sales for 2020 are projected to grow by 15 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 15 percent growth rate in sales?

MOOSE TOURS, INC.2019 Income Statement Sales $995,000 Costs (782,000)

Other expenses (15,000)

Earnings before interest and taxes $ 198,000 Interest paid (21,670)

Taxable income $176,330 Taxes (21%) (37,029)

Net income $139,301 Dividends $45,700 Addition to retained earnings $93,601 MOOSE TOURS, INC.

Balance Sheet as of December 31, 2019 Assets Liabilities and Owners’ Equity Current assets Current liabilities Cash $ 27,500 Accounts payable $ 71,500 Accounts receivable 47,300 Notes payable 9,900 Inventory 83,600 Total $ 81,400 Total $158,400 Long-term debt $171,600 Fixed assets Owners’ equity Net plant and Common stock and paid-in surplus $ 23,100 equipment $400,400 Retained earnings 282,700 Total $305,800 Total assets $558,800 Total liabilities and owners’ equity $558,800