1. a. (10) Crum Cos balance sheet and income statement for 2001 are given below. The firm expects sales to grow by 50% in 2002. Operating costs, spontaneous liabilities and assets will increase in proportion to sales. The company plans to finance any additional funds needed using debt at an interest rate of 10%. What is the companys projected funds needed for 2002? Assume interest expenses are 10% of the beginning year of debt balance.

2001 2002 1^st pass 2002 2^nd pass

Sales $1,000

Operating costs 800

EBIT 200

Interest 16

EBT 184

Taxes (40%) 73.6

Net Income 110.40

Dividends (60%) 66.24

Addn. To RE 44.16

Cash 30

A/R 150

Inventories 200

Total CA 380

Gross FA 700

Accum.Depreciation 80

Net FA 620

Total assets 1000

A/P and accruals 150

Debt 200

Common stock 150

Retained Earnings 500

Total Liab.& Equity 1000

b. (10) Construct the Year 2002 Statement of Cash Flows for Crum.

This is all information given for the problem. For Part b , the statement of cash flow should be as complete as much as possible with just the given data. Thanks