1. The most recent financial statements for PQR company are shown below: Income Statement Balance Sheet Sales $600 Asset Liabilties Costs 500 Cash $10 Account $40 Payables Taxable Income 100 Taxes (34%) Net Income 34 Inventory 150 Notes 100 Payables $66 Fixed Assets 800 Long-term 350 Debt Equity $470 Total $960 Total $960 a) Suppose that current assets, costs and accounts payable maintain a constant ratio to sales. The firm retains 40% of earnings. If the firm is producing at only 90% capacity, what is the total external financing needed if sales increase 25%? b) Suppose that assets and costs maintain a constant ratio to sales. The firm retains 30% of earnings. If the firm is producing at full capacity, what is the growth rate, assuming no new equity issuance, that will maintain a constant debt-to-equity ratio?