In Problem 23, suppose the firm wishes to keep its debt equity ratio constant. What is EFN now?

Data from Problem 23

The most recent financial statements for Moose Tours, Inc., follow. Sales for 2003 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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Sales Costs Other expenses Fixed assets Current assets Cash Earnings before interest and taxes Interest paid Taxable income Taxes (35%) Net income Total assets Accounts receivable Inventory Total Dividends Addition to retained earnings Net plant and equipment MOOSE TOURS, INC. 2002 Income Statement Assets MOOSE TOURS, INC. Balance Sheet as of December 31, 2002 $ 28,000 49,000 84,000 $161,000 $385,000 $44,772 67,158 $546,000 Current liabilities $980,000 770,000 14,000 Accounts payable Notes payable Total $196,000 23,800 Liabilities and Owners' Equity $172,200 60,270 $111,930 $ 70,000 7,000 $ 77,000 $168,000 Long-term debt Owners' equity Common stock and paid-in surplus $ 21,000 Retained earnings 280,000 Total $301,000 Total liabilities and owners' equity $546,000