30.4 The total amount of external financing is unchanged because the dividend payout is unchanged. The $103.4 million increase in total assets in 2022 will now be financed by a mixture of debt and equity. In 2021 equity accounted for 427/517 = 0.826 of capital.

Therefore, the firm will need to increase equity by 0.826 × $103.4 = $85.4 million and debt by 0.174 × $103.4 = $18.0 million. Because reinvested earnings already increase shareholders’ equity by $35.5 million, the firm would issue an additional $49.9 million of new equity and $18.0 million of debt.